Retail check cashing refers to check cashing services that “live” inside another business. A convenience store offering quick bill pay, check cashing, and prepaid debit cards is a retail check casher. Alternative financial services are a natural complement to the existing products found in a community business. Gas stations, liquor stores, beauty shops, groceries, and bodegas are all ripe with the opportunity for retail check cashing.
Why Retail Check Cashing? Why Now?
Retail check cashing provides convenience for the consumer by offering vital financial services right where they are already shopping. Redlining continues to plague low income neighborhoods, leaving them with little or no access to banking services. In neighborhoods where bank branches are scarce (or altogether absent), retail check cashers deliver financial inclusion. When these services are paired with another business, the convenience is doubled.
The consumers are not the only ones who benefit from retail check cashing! The business owners themselves reap many rewards for offering check cashing services, including: increased foot traffic to their location, improved customer loyalty, and the ability to reach individuals who would not otherwise enter their store. As Amazon edges in on physical retail stores and FinTech companies vie to compete with check cashers, this diversification of services gives retail check cashers an edge.
Check cashers are also experiencing increased competition from an unlikely source: big banks. Traditional financial institutions are extending check cashing services to non account holders in order to compete with check cashers. Why? It is no secret that the unbanked and underbanked portion of the population is growing. Many millennials are eschewing traditional bank accounts in favor of Fintech options. Other working adults rely on check cashing to bridge the gap between paychecks or pay for unexpected expenses.
A Notable Retail Check Cashing Merger
In Australia, Western Union just announced a major partnership with BP. The new arrangement will allow Australians to access and utilize Western Union services at 302 BP locations countrywide. This is just one part in Western Union’s push to digitize their retail offerings and respond to their consumer’s Fintech affinity.
Western Union’s Australian director, Simon Millard, notes “Fintech is coming from the voice of the customer. So that means finding out what customers want and how do we make their life easier. That includes things like increasing our hours of operation within our retail environment, which is something that our partnership with BP does. We know customers want to send in the evening when they get home from work, BP gives us 24/7 access.”
What can retail check cashers across the globe that aren’t as big as Western Union or BP glean from this? Make every effort to make the lives of your customers easier, more efficient, and as convenient as possible. Staying open later, offering a diverse lineup of check cashing services, and providing a loyalty program are all ways to help your customer. Most importantly, view fintech as an opportunity rather than a threat. Each change within the industry brings a new opportunity for you to better serve your customer and improve your business operations.
Retail Check Cashing In the United States
In the US, roughly 24 million households are underbanked, lacking full access to traditional banking services. These households rely on check cashing and alternative financial services to perform routine tasks like paying rent and bills, loading prepaid debit cards, and sending money to family. For these families, retail check cashing is not only convenient, it’s essential.
Convenience store check cashing is probably the most recognizable form of retail check cashing today. As the Western Union and BP deal highlights, gas station retail check cashing is also popular. There is a common misconception that the only people using check cashers are those without bank accounts. This is far from the truth! In fact, many people supplement their traditional banking activity with check cashing services. As a result, retail check cashers are serving a diverse customer base.
This diverse customer base has one thing in common: they are using alternative financial services and they prefer convenience. As a retail check casher, you are focused on reducing fraud while providing these convenient services to as many customers as possible! In order to juggle the demands of your business, it is vital to have a real check cashing business bank account. In the United States, many big banks are severing ties with check cashing industry, terminating the accounts of their check cashing business clients.
This phenomenon of derisking is partially the result of tightening federal regulation and partially the result of banks entering the check cashing industry themselves. Fraud prevention is essential for finding and maintaining a steady check cashing bank account. Unlicensed check cashers, those cashing less than $1,000 per customer per day, may not be subject to regulation, but they still have a strong incentive to prevent fraud. Licensed check casher, those cashing over $1,000 per customer per day, are subject to additional federal regulation.
Many retail check cashers fall into this unlicensed category. In order to prevent fraudulent activity, it is imperative that they take steps to secure their business location and train their employees on a strict check cashing process. Adherence to this process will help the business spot red flags before they become trouble.
Your Retail Check Cashing Solution
NCC provides solutions for retail check cashers, including: real bank accounts, POS technology, compliance and fraud prevention services, and 24/7 customer service. As derisking threatens check cashers in the US, NCC provides the only redundant banking solution. When you become an NCC client, you receive a real check cashing bank account that is backed by a network of MSB friendly banks. This means you can focus on the other parts of your business like growing your customer base and expanding your services.
Open your check cashing business bank account TODAY! Call NCC or fill out a form on our website to get the process started.