The Retail Check Cashing Industry

October 21, 2016

The check cashing industry is diverse, encompassing many different types of regulated and unregulated money service businesses. National Check and Currency serves stand alone check cashing businesses, commercial check cashers, and retail check cashers. Among these categories, NCC serves both regulated and unregulated check cashers.

Types of Retail Check Cashing

NCC’s retail check cashing clients fall into the unregulated check cashing segment. An unregulated check casher is one who cashes less than $1,000 per customer per day through their business. This lower check cashing threshold does not require the same amount of Federal regulation as those MSBs who cash thousands of dollars of checks per customer per day.
Retail check cashers do, however, face some of the issues that regulated check cashers face. Namely, all check cashers need a real check cashing bank account. In addition to MSB bank accounts, all check cashers require fraud protection, supported MSB financial services, and support.
There are 6 types of retail check cashing that NCC is proud to serve:

  1. Grocery store and bodega check cashing
  2. Restaurant check cashing
  3. Liquor store check cashing
  4. Beauty shop check cashing
  5. Convenience store check cashing
  6. Gas station check cashing

The Benefits of Retail Check Cashing

Retail check cashing services have many benefits. As a retail store owner, you are looking to diversify your business, bring in new customers, and encourage customer loyalty. Check cashing helps you achieve all of these business goals. Retail store owners already have a brick and mortar space for their customers. Adding retail check cashing to the location is a relatively easy way to expand and strengthen your business.
Retail check cashers are able to build on their presence in the community and give their customers even more reasons to patronize their establishment. Furthermore, check cashers can encourage their financial services clients to spend some of the money they receive from cashed checks at the retail location. Restaurants, gas stations, grocery stores, bodegas, convenience stores, liquor stores, and beauty shops can run cross promotions to stimulate both arms of their business.
A grocery store that also cashes checks can incentivize their customers to do their shopping on the spot with discounts and promotions. This even further reinforces the positive role that your retail check cashing business plays in the community. Your retail store becomes a hub for financial activity and shopping. In this example, your customer benefits from the convenient and accessible financial services located at a store they already frequent. The store owner benefits from happy, loyal customers who spend more money at their grocery store. With retail check cashing, the entire community wins.

What are Retail Check Cashing Services?

Retail check cashing services are nontraditional financial services offered by retail check cashers. Since the Great Recession in 2009, access to traditional financial services has been largely cut off for some communities. Retail check cashing services help bridge the gap through non-traditional, accessible financial services. Convenience store check cashing is one of the most recognizable retail check cashing categories. But, many other retailers also offer retail check cashing services!
Types of retail check cashing services include:

  1. Check cashing (ex: payroll check)
  2. Prepaid debit cards
  3. Money orders
  4. Traveler’s checks
  5. State lottery
  6. Prepaid phone cards
  7. Tax preparation
  8. Fax and copy
  9. ATM

According to the Wall Street Journal, prepaid debit cards are increasingly important for unbanked households in the United States. And, the majority of people purchasing prepaid debit cards are purchasing them from retail locations.

“When asked where they acquired prepaid cards, 43% said a retail store or a website that isn’t a bank, while 17% said they purchased theirs at banks or bank websites.”
The Wall Street Journal

Since 2009, retail check cashing services have filled a void in our recovering economy. Even banks are rolling out check cashing services, enabling their customers to receive cash from checks before they clear for a fee. CBS News reports on the phenomenon and says that banks are hoping to get a slice of the market that is currently dominated by local check cashing stores.
With increased competition from banks, retail check cashers are looking to diversify and supplement their services. By adding a robust “one stop shop” for financial services, check cashers are digging their heels deeper into the market. Successful check cashers are tailoring their service line-up to their community and using strategic cross promotion between their retail business and their check cashing business.
For example, a convenience store can offer a discount for customers cashing their checks and then shopping at the store with their cash. Drawing in new customers and delighting existing customers is essential to the industry. Since banks are now getting into the check cashing game, special promotions and convenience are two ways that check cashers can differentiate themselves from the competition.

Retail Check Cashers Are Losing Their Bank Accounts

Even though retail check cashers serve their communities with vital financial services, they face a number of obstacles. First, having a real MSB bank account is crucial for retail check cashers. Without one, they can’t operate. Second, fraud is always top of mind for check cashers. And third, efficient rotation of capital is essential to own and operate a check cashing business.
National Check and Currency helps both regulated and unregulated check cashers meet these obstacles head on for continued success. To recap, unregulated check cashers include retail check cashers who are cashing less than $1,000 per day per customer. For unregulated check cashers, MSB compliance is not an issue. A reliable bank account, fraud prevention, and rotation of capital, however, are top of mind.
A reliable bank account is the foundation of all check cashing business, but keeping one is not as easy as it seems. Thanks to indiscriminate derisking, the act of banks shutting down check cashing bank accounts due to perceived risk, check cashers are losing their bank accounts left and right.

How NCC Helps Retail Check Cashers

NCC client, Al Tawel, owns and operates Metro Check Cashing in Lake Worth, FL. He has been in business for 8 years and currently focuses on check cashing and wire transfer. The majority of his clients are long term repeat business. About 3 years ago, Al grew restless watching his fellow check cashers lose their MSB bank accounts. He reached out to Andy Benjamin of NCC to discuss his banking options.
With a real bank account from NCC, Al was able to actively combat the debanking trend. Even though Al had a banking relationship at the time, he wanted the peace of mind only available through NCC’s redundant banking partners. Al is now working to grow his business and open a second location.
National Check and Currency helps retail check cashers overcome their obstacles so that they can run a profitable business. NCC provides real, reliable MSB bank accounts for its check cashing clients. As the industry experiences wide scale derisking, this provides peace of mind.
NCC’s team of experts and proprietary technology also delivers advanced fraud detection. Your check cashing business gains an experienced compliance department, in addition to a real MSB bank account. Through NCC’s network of MSB banks, you will also enjoy fast rotation of your working capital and operational efficiency.

Advanced POS technology helps you get all of the information you need from your check cashing clients to prevent fraud and speed up transactions. NCC is really an all-inclusive solution for your retail check cashing business. If you are ready to discuss your retail check cashing solution and supported MSB services, call us or fill out a form today. Our team is standing by 24/7 to help you obtain a check cashing bank account.

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