Check cashing outlets offer alternative financial services beyond cashing checks. These services meet the varied needs of their community and fill in the gaps left by the traditional banking system. These diverse check cashing services include prepaid cards, convenient bill pay, money transfer, and even USPS services. Community members rely on these services to conduct daily financial activity and keep their households running. Many check cashers and money service businesses tailor their selection of financial services to their specific audience. This is an overview of some of the most popular check cashing services.
Prepaid Debit Cards
Prepaid debit cards are reloadable cards that function much like a debit card. When a customer cashes their paycheck, they can choose to load a certain amount onto their prepaid card. They can then use this card to grocery shop, get a tank of gas, and run other household errands. This service most directly serves individuals who do not have a checking account. WIthout a checking account and debit card, you are left having to pay for everything with cash. In today’s digital world, a card is necessary for so many transactions. The prepaid debit card allows its holder to shop online or swipe the card in store.
The first prepaid debit card was introduced in 1999 by entrepreneur Steve Streit. His Green Dot card was positioned as a way for teenagers to buy things online. The prepaid card industry has evolved since then. Now, prepaid debit cards are used by people with bank accounts to save, budget, and spend. When it comes to financial responsibility, prepaid cards allow you to stay within your budget. Since prepaid debit cards don’t come with overdraft protection and hidden fees like many debit cards, you can’t spend more than you’ve loaded onto the card. Many prepaid cards offer tools so that you can set spending limits, track your spending over time, and receive alerts. Some prepaid cards even offer loyalty programs and prizes for saving money.
Prepaid debit cards have greatly increased in popularity over the past two decades. There are now dozens of options on the market, each with its own unique functionality. For individuals with either bad or zero credit, prepaid cards also offer a building block for their financial future. New York startup Petal is launching a credit card for people who wouldn’t qualify for a traditional credit card. Rather than relying solely on the applicant’s credit score, the company will take account history, including history of prepaid debit card use, into account during the approval process.
Prepaid debit cards are coming under increased regulatory scrutiny. The Consumer Financial Protection Bureau (CFPB) issued new rulings in 2016 that affected prepaid debit cards as well as mobile wallets and peer-to-peer payment platforms. Check cashers are no stranger to MSB regulation and are carefully monitoring new rulings that affect their prepaid debit card services.
Convenient Bill Pay
Convenient bill pay is another service offered by check cashers and other money service businesses. Like prepaid debit cards, convenient or quick bill pay enables individuals without a bank account to conduct everyday financial transactions. In this case, the individual is able to pay their bills, including rent, cable, internet, phone, water, electricity, car payments, credit card bills, and even mortgages. This is an essential financial function that is often taken for granted by those with access to traditional banking services.
In order to use quick bill pay, a customer simply needs to bring their bill to a check cashing outlet that offers the service. The customer will present the bill along with a completed form, the bill payment, and applicable transaction fee. The customer can pay for the service with cash that they already have or from a check they just cashed at the same location. The check cashing outlet will provide the customer with proof of payment. This service can help those who are behind on bills or who are completely current. The service eliminates the need to write checks and allows you to pay your bills without a bank account.
For check cashers, convenient bill pay is a logical addition to their services. With customers already cashing their paychecks at the location, it only makes sense to offer a way for them to immediately pay their bills with the funds they receive from cashed checks. Complementary services like this promote customer loyalty and bring business into the check cashing outlet, all while serving the needs of the community.
Money transfer is the most well known alternative financial service. Money transfer can include online transfer of funds between parties as well as money wiring between a financial institution and an individual. Money transfers used to send money to friends and relatives abroad are known as remittances. In many cases, an individual will send funds to friends and family who are back in their home country from their new country of residence. Immigrants use remittance to support their families across borders.
Money transfer and remittance are heavily scrutinized by regulators. When funds change hands in this manner, there is an opportunity for criminals to fund illegal deals, commit fraud, or even send money to terrorist groups. As a result, regulators use Know Your Customer (KYC) rulings to help identify the sender of the money. Databases and technology are used to detect suspicious transaction patterns and keep track of transactional details. Record keeping and reporting further assist in the prevention, detection, and prosecution of financial crime.
Check cashers can add even more niche services to their business. These may include United States Postal Service transactions, an ATM, package lockers for same day delivery services, and lottery ticket sales. These services allow check cashers to diversify their product lineup while attracting customers. Which niche services a check casher can offer will vary by location, demand, and available agents. Mixing up the product lineup helps check cashers compete as banks and Fintech companies start to enter the check cashing industry.
The Future of Check Cashing Services
As technology evolves and more competitors enter the check cashing arena, check cashers need to be quick on their feet. This includes staying ahead of the curve with the services you offer. Keep an eye out for additional services that can diversify your revenue while meeting the demands of your current customer base. You also need to be able to react to new regulation efficiently. This means employing an expert compliance team to help you interpret regulation and put new systems, technology, and processes in place before deadlines.
Finally, you need a reliable check cashing business bank account. Your check cashing bank account is the backbone of your business and it makes it possible for you to offer check cashing and other alternative financial services.