Grocery Store and Bodega Check Cashing

November 04, 2016

Grocery store and bodega check cashing is one of the six types of retail check cashing. Grocery stores and bodegas naturally lend themselves to check cashing services because they are already hubs of community activity and commerce. As community fixtures, financial services are another way to serve their audience.

Why Do Grocery Stores Offer Check Cashing?

For the majority of Americans, cashing a check is as simple as snapping a picture on their phone and depositing it into their bank account. For roughly 10% of people living in the United States, this is not a possibility. People without bank accounts, the unbanked, are cut-off from these financial services and left without an easy way to cash payroll checks, personal checks, or even tax refunds. This is where check cashing comes into the picture.
Check cashing outlets bring access to financial services like check cashing, money orders, and prepaid debit cards to their neighborhoods. Some check cashers operate stand alone businesses with the sole purpose of offering check cashing services. Other check cashers already own a small or medium sized business, like a grocery store or bodega. By adding check cashing services to their retail location, they are able to meet their business goals.

Benefits of Grocery Store and Bodega Check Cashing

Grocery stores and bodegas offer check cashing services as a part of their customer service center. These grocery and bodega check cashing services can include check cashing, money orders, wire transfer, travelers’ checks, prepaid debit cards, bill pay, and state lottery.
Financial services help retail check cashers grow their business through fee-based income. Since the grocery store or bodega already exists, there is no additional cost for purchasing or renting a building. The check cashing services act as an add-on for their existing retail business. Retail check cashers reap a variety of benefits:

  1. Addition of a fee-based revenue stream
  2. Expanded reach in community
  3. Individuals cashing checks spend money at retail location
  4. Increased customer loyalty

Fee-based income refers to the profit a grocery store or bodega makes off of the fees associated with non-traditional financial services. A fee-based income stream is an effective way to build your business. By offering a diverse range of check cashing services, you can diversify and build this fee-based income and fuel your business growth.
Check cashing services also expand your reach in the community by bringing in customers who would not otherwise shop at your retail store. Once the new customers are in your store to cash a check, they are more likely to then spend the cash from the check at your location. This pattern of behavior drives customer loyalty and helps you create a base of repeat customers. Return business helps you steadily grow your business and expand your visibility.
Retailers aren’t the only ones benefiting from the check cashing services. Grocery store check cashing helps your community members:

  1. Cash their payrolls checks where they already shop
  2. Gain access to financial services
  3. Take advantage of promotions and sales

Grocery store and bodega check cashers provide their customers with a fast and convenient way to cash their payroll checks. Your customers don’t have to make a separate trip to the bank or check cashing outlet, they can simply cash their checks when they are out running their grocery errands.
For many of your customers, you are providing access to banking that they would not otherwise have. Your grocery store or bodega serves the unbanked through check cashing services.These non traditional financial services help the unbanked by providing a place for them to cash their payroll checks, send money to friends and family, load a prepaid debit card, and even pay bills.
Grocery stores and bodegas offering check cashing services act as unregulated money service businesses. Unregulated MSBs are those who cash checks totaling less than $1,000 per customer per day at their location. As a result, grocery stores and bodegas are not subject to the same federal regulations as other MSBs who cash more than $1,000 per customer per day.

Obstacles for Grocery Store Check Cashers

Even though unregulated retail check cashers do not face the same federal regulation as other MSBs, they still face obstacles in the form of fraud. To minimize risk, retail check cashers can take efforts to prevent fraud. Unregulated retail check cashers can prevent fraud through proper identification of customers, clear and consistent record keeping, advanced POS technology, and by educating their employees on proper procedures.
Beyond fraud, the check cashing industry also fights a bad reputation. Many people misunderstand the services check cashers provide in the financial ecosystem. Federal regulation for regulated money service businesses hasn’t helped either. Regulators trying to protect against financial crimes like terrorist financing, money laundering, and check fraud have inadvertently given check cashers a bad name.
Many banks have completely cut out MSB accounts in an attempt to comply with regulation. Their compliance departments determine it is easier to shut down MSB bank accounts than it is to stay compliant. Unfortunately, in this situation, both the bank and the MSB miss out on a profitable and enjoyable relationship.

Bodega Check Cashing Compliance

For bodegas and grocery stores, staying compliant means implementing a system to protect against fraud. Since unregulated check cashers do not need to stay compliant with federal regulation, this form of compliance is not legally mandated. Instead, we are referring to procedures and measures that can protect against fraud and improve efficiency.
For bodegas, customer identification is essential. A check cashing customer will register with your business before they cash their first check. During this process, identification is confirmed and a record is created. This check cashing process helps your business keep track of its check cashing customers and identify patterns that might indicate fraudulent activity. This record keeping also signals to your banking partner that you are taking precautionary measures to protect the quality and legality of your check cashing business.

How NCC Supports Small Business Owners and Check Cashers

National Check and Currency plays a huge role in preventing check cashing fraud at your grocery store or bodega. The NCC team has experience with federal regulation, financial crime investigation, and check cashing operations. This extensive knowledge has led to the implementation of advanced POS technology, efficient systems, and supported MSB services. The package of support, services, and technology that NCC provides for their clients work together to protect you from fraud and keep your business up and running.
The number one threat to retail check cashers is the loss of their check cashing bank account. By streamlining communication between your check cashing location and your bank NCC facilitates a transparent and amicable banking relationship. Furthermore, NCC’s network of redundant financial partners ensure that you never have to worry about becoming debanked.
As an NCC client, you can focus on growing your business and serving your customers. Learn more about NCC’s supported MSB services and MSB compliance expertise. If you are ready for a check cashing bank account, call NCC today or fill out the “Open Account” form online.

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