Which Banks Honor IDNYC?

Eric Pallas, president of Spring Bank (Photo courtesy of Spring Bank)

Eric Pallas, president of Spring Bank (Photo courtesy of Spring Bank)

The introduction of IDNYC has proven wildly popular with New Yorkers, with more than 830,000 city residents signing up for the card since the program launched in January 2015.

One of the major selling points when the city introduced the card was that it could be used as acceptable identification for opening a bank account ― it was thought this could pave a path to better financial status for a host of unbanked immigrants who previously lacked the necessary documents to open an account.

Yet more than a year into the program, only 12 financial institutions in the city accept IDNYC as a primary form of identification for starting an account.

The city’s largest and most common banks have been slower to get on board with the program. JP Morgan Chase, which has 379 branches citywide, currently does not accept IDNYC for opening an account. Neither does TD Bank, which has 132 branches citywide.

However, both banks have indicated that they will begin accepting IDNYC as secondary ID by the end of 2016, according to a city official, who said that high-level administration members are continuing an outreach effort to expand the list of financial institutions that accept the card.

Bank of America, with 119 city branches, accepts IDNYC as a secondary form of identification only, as do Wells Fargo and Capital One.

The city has produced a multilingual banking brochure that highlights banking benefits to the IDNYC card, with bank and credit unions that accept the card as primary identification noted within.

Making it easier for unbanked New Yorkers to save

For banks that do not accept IDNYC as a primary form of identification, customers are required to produce other forms of identification for account opening, which many immigrants in the city might not possess.

According to the New York City Comptroller’s office, there are currently 36 banks in the city that accept IDNYC as either a primary or secondary form of identifying customers.

“IDNYC is a fantastic way for hundreds of thousands of New Yorkers to gain access to our banking system, but many banks still do not accept it as a primary form of ID,” said City Comptroller Scott Stringer. “I urge all banks to seriously consider accepting IDNYC to make it easier for unbanked New Yorkers to save for their futures.”

Nisha Agarwal, Commissioner for the Mayor's Office of Immigrant Affairs, at the April 2 briefing held jointly with the Center for Community and Ethnic Media (Photo by Yehyun Kim for Voices of NY)

Nisha Agarwal, Commissioner for the Mayor’s Office of Immigrant Affairs (Photo by Yehyun Kim for Voices of NY)

While elected officials such as Stringer and some immigrant groups have chided larger banks for failing to accept the card, Mayor’s Office of Immigrant Affairs (MOIA) Commissioner Nisha Agarwal suggested that the smaller community banks might be better equipped to serve the lower-income set.

“We’re very happy with the community banks that have become our banking partners from the outset, because they actually do offer products for low- and moderate-income families, and particularly the first-time bank account openers,” Agarwal commented at a tax-season IDNYC event in the Bronx. “So, that was our priority all along. We’d love to see other partners come on board as well, and we’ll continue talking to them as we make those decisions,” she added.

Larger, national banks have cited fraud and money laundering concerns as a reason for not accepting IDNYC. Perhaps it is due to fear of fines by U.S. regulators — in 2012, HSBC was fined $1.9 billion for failing to prevent money laundering related to Mexican drug cartels.

A Bank of America spokeswoman said that there are additional risks in accepting the IDNYC as a standalone type of primary ID. She added that the bank relies on multiple forms of identification “in order to form a reasonable belief that the bank knows the true identity of the customer.” Though the Federal Reserve and Treasury Department advised financial institutions last year that IDNYC was satisfactory for opening a bank account, it has ultimately been left up to individual banks as to whether the municipal ID is accepted.

“The big thing was whether the regulators would get on board, and they have,” said Eric Pallas, president of Spring Bank, one of IDNYC’s banking partners. “It’s my feeling that the big banks just don’t want the same customers that we do.”

Spring Bank is based in the Bronx, which has the lowest concentration of bank branches per household of any county in the United States, according the City Comptroller’s office. Pallas said his bank has opened 128 accounts for consumers using IDNYC as their primary source of identification.

“I suspect many of those people wouldn’t have had access to banking without the card,” he remarked. When Spring Bank opened in 2007, it was the first Bronx-based bank to open in more than 25 years. Its focus has been on catering to New York City’s underbanked population, allowing customers to reduce reliance on check cashing services, rent-to-own stores, pawn shops and other fringe services, explained Pallas.

“Our mission has always been to offer services to low- and moderate-income groups,” Pallas said. “We really want to be an alternative to predatory lending that’s so pervasive in low-income communities.” Spring Bank, which opened a second branch in Harlem in 2012, offers a “Borrow & Save” loan product aimed at consumers with low credit scores or no score at all, a population that would normally be unable to secure a loan with large banks, said Pallas.

“Rather than focus on credit scores, we focus on the applicant’s ability to pay the loan,“ he said. “We want to see that they’re current in their bills for the past three months, not their credit history.”

Bronx resident Tonya Zephir opened her first bank account last year after signing up for IDNYC.  “A lot of people don’t even understand how a bank account works, they don’t know about savings,” Zephir said. “IDNYC is a good way for them to finally get an account and start banking.”

The city’s IDNYC banking partners have commented that the failure by large banks to more readily embrace the card is preventing many New Yorkers from getting on sound financial footing.

Large banks and low-income customers

“Without widespread adoption, hundreds of thousands of people from New York’s communities, who simply want to deposit their paychecks, may instead get confused as to their options,” said Keith Mestrich, president and chief executive officer of Amalgamated Bank, which accepts IDNYC. “This confusion may ultimately keep these residents in the shadows, and out of the financial mainstream.”

As of March 2016, Amalgamated had opened 437 bank accounts using IDNYC as the primary form of identification, according to Maura Keaney, Amalgamated’s first vice president for strategic development.

Amalgamated, which is the largest union-owned bank in the country, became the first banking partner to sign on with the city’s IDNYC program, said Keaney. “As soon as the bank heard about the program, it was eager to participate,” she explained. “We are a progressive bank. We believe that low-income New Yorkers have a right to banking services as much as anyone.”

Keaney said that Amalgamated offers a “restart checking” product, which acts as a second-chance account for people with credit issues. The bank also sponsors financial literacy programs at all of its New York City branches, and has partnered with community-based organizations, she said.

If anything, it would appear that large banks are becoming less hospitable to low-income customers in recent years.

According to a report by financial research outfit Moebs Services, overdraft revenue rose to a new five-year high of $32.5 billion for the fiscal year ending June 2015. Overall service and maintenance charges grew to $42.3 billion for the same period.

Additionally, the percentage of banks with more than $50 billion in assets that offered free checking declined from 96 percent in 2009 to 41 percent in 2011. Comptroller Stringer has been particularly outspoken about wanting more banks to accept  IDNYC. In December, Stringer said that his office would be contacting every bank in the city that fails to accept the card, to discuss what steps they are taking to change their policy.

“Take It To the Bank”

So far, information regarding those conversations has not been released by the Comptroller’s office.

To assist lower income New Yorkers, Stringer launched an online tool, dubbed Take It To The Bank, which allows consumers to search financial institutions in the city that offer accounts with no fees or minimum balance requirement, and accept IDNYC.

A 2015 study conducted by Stringer’s office discovered that the average cost in bank maintenance fees to New York City residents was $73 annually.

“Banks in New York City should be open to all New Yorkers, regardless of their economic or immigration status,” Stringer said. The policy of some banks in not accepting the ID “prevents many of the more than 800,000 unbanked New Yorkers from securing bank accounts, harming their ability to save and leaving them vulnerable to high fees,” he added.

According to city officials, a high number of city residents in immigrant-heavy communities have applied for IDNYC. In Washington Heights, 27,213 people have so far signed up for the card. In the Bronx, there are more than 147,800 cardholders.

An extensive IDNYC outreach program has been conducted by MOIA, as the agency set up pop-up enrollment centers in 53 locations last year and attended at least 1,700 community events.

While the city continues to engage banks regarding expanded IDNYC access, it seems the focus for now is on raising awareness of the banking partners that IDNYC already has, rather than fretting about ones that it doesn’t.

Agarwal pointed out that most banks that do not currently accept IDNYC as identification will accept passports, which many New Yorkers already possess. “Some of the forms of identification people are using to get their IDNYC, they can still use to open a bank account,” said Agarwal. “Education on that is something we want to prioritize moving forward.”

Gregg McQueen is a reporter for Manhattan Times and The Bronx Free PressThis article was written as part of the Business Reporting Fellowship of the Center for Community and Ethnic Media and funded by a grant from News Corp. 

3 Comments

  1. Pingback: IDNYC: an ID card for all New Yorkers – New Women New Yorkers

  2. Alfonso Adjei says:

    You guys give great Intel on behalf of letting people know which banks accept idnyc. Shout out to Amalgamated Bank, you guys will be seeing me!

  3. James Saunders says:

    Thank you for such wonderful information. Amalgamated will also be seeing me soon

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