I think it's a combination of factors. Distrust of the system, lack of steady cash flow, lack of local offerings.

High cost (fees are proportionally much more expensive), shady practices[1], accounts frozen by creditors.

Poor people are making completely rational decisions when choosing not to trust banks, and it's patronizing to assume they simply don't know better.

[1] banks re-ordering transactions to maximise overdraft fees.

So there's an opportunity it sounds like. Why are no services stepping in to capture all those potential customers?

Oh there are, all those cheque cashing places for example, and they're under-regulated, so not too great either.

Still paying a larger fee to cash a cheque sure beats having all your assets frozen entirely.

Check cashing isn't banking though. I mean why aren't there banks that can be sustainable without overdraft fees? I get the idea of a fee if they cover a charge in which funds aren't available. But can't a debit card simply decline if no funds are available - hence the bank never covers an unfunded charge and thus never charges overdraft fees? Are there not other ways to monetize banking for low cash flow individuals?

Banks don’t really exist to help people save money anymore. For the most part, they exist to extract fees from people who keep money there and from borrowers.

In addition to overdraft fees, banks charge monthly fees if you don’t maintain a high balance or regularly make direct deposits. This is how they “monetize” poor people. In reality the result is that these people go unbanked and simply keep cash.

- Living off the grid

- Illegal presence in the country

- Concealing income from taxation/child support order

There is decent data that people spend more than they intend with cashless over just spending physical cash. So poor people are making a rational decision.

banks have minimum balances for them to not charge a fee.. not having good credit and not having money for the minimum balance on a checking account tend to go hand in hand.