A common assumption is that users of non-bank financial services – payday loan or check cashing businesses – are primarily low-income or are among the unbanked or underbanked. But after conducting a survey of its existing customers, Regions Bank found there was a demand for such products by people from all income levels.

More than 30 percent of Regions customers surveyed from December 2010 through January 2011 reported using one or more non-bank financial services within the previous 90 days, and almost half of those surveyed said they would be likely to use similar services from Regions if the bank offered them.

The survey led the bank to conclude that there has been a shift in the way that many traditional banking customers are choosing to manage their finances, adopting a pay-as-you-go philosophy that means forgoing credit.

To serve those customers, as well as to reach young customers, the unbanked and underbanked, Regions has introduced Regions Now Banking, a slate of services giving customers more choices in how to manage their money.

Included in Regions Now Banking are the Regions Now Card, a general purpose, reloadable Visa prepaid card, check cashing and money transfers, and expedited bill pay services through Western Union. A free online financial literacy education also is offered through a partnership with EverFi.

The program allows users to cash pretty much any check. It also provides a fairly easy pathway to sign up for traditional banking services, such as a checking account.

Regions Now came to Middle Tennessee in November, says Jim Schmitz, Regions’ Middle Tennessee area president. It was a soft introduction to ensure bank staff members were on board and rolling smoothly with the new products and services.

“There was some difference here in the way you would normally be doing business as a teller in a branch,” Schmitz says.

Regions promotes Regions Now Banking as safer and more secure than non-bank financial services businesses because its services and products are offered in a federally regulated banking environment. The Regions Now Card can be used just like a Visa debit card for purchases or ATM transactions. Funds can be loaded on the card from cash, a transfer from an existing Regions account or through direct deposit, and are FDIC insured. Purchases are protected by Regions Safeguards.

The bank states all fees, including a monthly maintenance fee of $5 for the Now Card that can be waived through a $500 monthly direct deposit, are always disclosed. Regions also maintains that its fee structure is one-third to one-half less than those of non-bank providers.

Schmitz was asked whether consumer protections for prepaid cards, under consideration by the Consumer Financial Protection Bureau, a fairly new federal agency, are necessary. Prepaid cards have much less regulatory protections than bank accounts or debit or credit cards.

“I’m not going to pretend at this point to try to tell the CFPB what’s right and what’s not,” he says. “They are a regulatory body. We’ll make suggestions. We’ll try to have our input as they write the rules and we’ll abide by whatever they issue.”

Despite low-key advertising, there has been a higher volume of Regions Now Banking users than the bank expected.

“We’re definitely seeing growth of our customer base,” Schmitz says. “We’re seeing new faces come into our branches to take advantage of these products.”

Other large banks have entered the prepaid card arena, including Bank of America, Wells Fargo, U.S. Bank and First Tennessee.

Consumers loaded about $57 billion onto prepaid cards in 2011. The dollar load onto prepaid cards is expected to grow by 42 percent per year (from 2010 to 2014), according to Mercator Advisory Group, a payments industry research group. It is projected to reach approximately $82 billion this year, $117 billion in 2013, and $167 billion in 2014. According to 2009 FDIC data, 9.7 percent of all households have used prepaid cards.

“We’re doing a lot of work in the payment space,” says Dan Marks, First Tennessee Bank’s chief marketing officer. “We just launched a variety of prepaid cards that are available in our branch lobbies. You could use them to order online, or you can give them as a gift or for travel purposes if you want to take a card with you that works overseas.”

Regions also is introducing several new personal credit cards, but is not yet promoting them.

Cards are a good source of revenue for banks, says Debbie Bowles, owner/partner of Advanced Payment Solutions.

“When banks issue a credit card, they make money off of the interchange, which is the cost from Visa and MasterCard to a merchant,” Bowles says. “So when a bank issues that card, they make a good portion of the money that is paid to Visa and MasterCard by the merchants where they’re used.

“Whether that is a check card, a rewards card, a regular credit card, a business credit card, or a prepaid card, they make money on all of those. So it becomes a revenue source.”