I was initially going to title this blog “F*ck The Banks” because of all the havoc they’ve wrought in peoples’ lives, and how, even after the bailouts and the recession, the foreclosures and congressional hearings, they still don’t get the American middle class.
Then I reflected on the fact that these are, for the most part, decent, hard working, intelligent Americans whose institutions helped build this country, but who happen to be stuck in an old mindset, with outdated “brick and mortar” infrastructures, piles of bureaucracy, and systems that were built over decades to charge hidden fees to their customers. It will take them many years to change, but I believe that they will change, if for no other reason than to survive. In the meantime, technology is enabling companies like mine to circumvent the banks altogether and to pick up the middle class they left behind.
Nearly a decade ago I realized that most banks didn’t want to touch the 60 million Americans, disproportionately minority, student and immigrant, but of every color, race and age – who had little or no access to the traditional banking system.
In my travels around the country I learned about the hardship caused by mothers having to stand in line for their paychecks, and then have to wait even more to cash those paychecks, and then further lines to pay their bills, often with their children at their sides.
Meanwhile those who were banked were charged fees for checks that didn’t clear, for transactions they didn’t know their cards couldn’t cover, fees for balances below the minimums, inactivity fees and dozens of other hidden charges.
After hearing that the banks didn’t want the business of these hard-working Americans on any terms that were fair to them, I realized that the customers for my fashion and entertainment businesses were being locked out of the American Dream. So I set out to pioneer an industry, called the “General Purpose Reloadable” (GPR) Debit Card business that would give people who believe in me and what I stand for access to everything and more than the regular banks were offering, but at a much lower cost.
In the process I realized I could offer these same services, with the help of technology, to the entire middle class.
These are not gift cards, they are business cards you use to collect your paycheck, pay your bills, transfer money, build credit and get access to products usually offered to the rich. You use this card instead of a bank. Eventually you won’t even need a card, just a mobile, to use these services.
Everybody told me I was mad to create a business around this customer. They said you could never make money in this industry because the potential customers have bad credit, they were risky and unreliable, they were better off in the hands of check cashers and payday lenders. I developed the Rushcard for them, and what I’m discovering now is that technology has evolved to make this a middle class card that benefits all working Americans.
Today, “GPR” debit cards are a $150 billion business(Note 1) and the fastest growing financial service. I’m proud to have stood there at the beginning, spitting truth to power, like I did with Def Jam, Def Comedy Jam, Def Poetry, Def Jam Games, Phat Farm and Baby Phat. In the meantime, my debit card bu