What is debanking? Understanding its impact and exploring solutions

‍What is debanking?

Debanking refers to the process where banks close or refuse to open accounts for certain customers, often due to regulatory concerns, risk management, or profitability issues. This can affect both business and personal customers and means that unless the customer keeps accounts at another financial institution, they risk having no access to banking services, for an unknowable period of time.

Recently debanking has become more prevalent, leaving many businesses, particularly smaller and medium-sized enterprises (SMEs), struggling to access essential banking services.

‍

Causes of debanking

Several factors contribute to debanking, including:

1. Regulatory compliance: Increased regulations and compliance requirements can make it costly for banks to maintain accounts for certain businesses, especially those considered high-risk. These regulations and compliance requirements may also force banks to close accounts in order to comply.
   ‍
2. ‍Risk management: Banks often debank businesses in industries deemed high-risk to mitigate potential financial losses or reputational damage.
   ‍
3. ‍Profitability concerns: Banks may close accounts that are not financially lucrative, impacting SMEs the most.

‍

‍

Impact of debanking on businesses

The consequences of debanking can be significant for businesses:

• Operational challenges: Difficulty in managing day-to-day financial transactions and spending.
  ‍
• Limited access to financial services: Challenges in accessing loans, credit facilities, and other banking services.
  ‍
• Reputational damage: Being debanked can wrongly suggest a business is high-risk or non-compliant.

‍

Navigating debanking with Card One Money

Card One Money provides a financial solution for businesses affected by debanking. Our business account is designed with the needs of modern businesses in mind, offering a range of features and benefits:
‍

• Easy account set-up: Quick and hassle-free account opening process.
  ‍
• No credit checks: Card One Money's business account ensures that your credit history does not impact your ability to open a business account, great for those with no or poor credit history and for businesses that are yet to trade.¹
  ‍
• Comprehensive financial services: Access to essential banking services, including online banking, prepaid payment cards, and efficient payment processing.^{2
  ‍}
• Safeguarded funds: Protection of your finances is important. Card One Money protects customer funds via safeguarding, holding them in specially designated safeguarded bank accounts, separate from their other assets.³

‍

‍

Why Choose Card One Money?

1. ‍Empower team spending: Order cards for up to four other people within your business and assign different levels of access based on their roles and responsibilities.
   ‍
2. ‍Cashback rewards: Load your Card One Money prepaid Mastercard and start spending to get up to 3.5% cashback at some of the UK’s most popular retailers.
   ‍
3. ‍UK-based customer support: With a dedicated customer support team, business owners can receive assistance and ensure a smooth financial journey.
   ‍
4. ‍Online and mobile banking: In an era where convenience is key, Card One Money offers online banking 24/7 and a mobile app, allowing you to manage your finances on the go.

‍

Conclusion

Debanking poses a significant challenge for many businesses. Our business account offers a reliable and accessible banking alternative, ensuring that your business stays on track in the face of debanking challenges. Choose Card One Money for your business transactions and spending, and experience a banking alternative designed with your business in mind.