Take On Payments

Challenges and Changes in Financial Inclusion and Empowerment

Not so long ago, women faced limitations on their financial freedoms in areas we take for granted today. Opening a bank account, obtaining a credit card, or acquiring a mortgage or business loan in their own names was restricted. The norms of the day fostered inconsistent practices that left many women financially disadvantaged, disempowered, and dependent on a male relative. Fortunately, things are different today. Women are now drivers in the payments seat, making more than 90 percent of household purchases.

In honor of Women's History Month, let's take a look at the role of women in payments and how our financial options have evolved.

As recently as the 1960s, married women could not open bank accounts in only their names. A woman had to bring a male relative, usually a husband, to cosign. A single woman would need her father's signature.

In the 1970s, a married woman couldn't obtain a credit card or loan in her name without her husband as cosigner. Single women could be denied outright. Things changed in October 1974, with the Equal Credit Opportunity Act  that allowed single, widowed, and divorced women to obtain a credit card or a loan without a male cosigner and without regard to race, religion, national origin, age, or marital status. Still, even when women could get credit cards, they often faced other penalties including paying a higher interest rate or had credit limits based on income that was discounted to 50 percent of their actual earnings.

Until the late 1980s, women couldn't get a business loan without a male cosigner. The Women's Business Ownership Act of 1988 amended the Small Business Act to assist the efforts of businesses owned and controlled by women to obtain loans on their own. Since then, women's business ownership has dramatically increased.

By 2019, women owned more than 11.6 million businesses (combined employer and nonemployer), employed more than 9 million people , and generated $1.9 trillion in annual sales. Now, women of color make up 89 percent of newly opened businesses each year, with 50 percent of all women-owned businesses owned by women of color. (See the Small Businesses of Color Recovery Guide  for information on how communities can support small businesses of color as they recover from the economic crisis caused by the pandemic.)

Women's power in the field of finances continues to grow, with many women taking C-suite leadership roles in the areas of financial services and payments, including in fintechs. It is essential that we have women in these positions of leadership because women do hold such influence in household purchasing. Having payment systems and choices that make it easy, secure, and fast for women to exercise their purchasing power are the opportunities in the 21st century.

By Scarlett Heinbuch, a payments risk expert in the Retail Payments Risk Forum at the Atlanta Fed