Check cashing solutions for small business retailers allow you to turn your convenience store into a financial center for your community. Why are retail check cashers essential for our current economy? The prohibitive cost to enter the traditional banking system and the lack of bank branches in minority neighborhoods are currently restricting financial inclusion.
Approximately 20% of American households are underbanked and 7% are completely unbanked according to a 2015 FDIC survey. How are these people cashing they payroll checks, paying bills, and loading cards? Through retail check cashers, check cashing outlets, and other money service businesses.
The need for retail check cashing solutions stems from diminished financial inclusion. In the United States, we are experiencing levels of financial inclusion that are lower than expected for a developed country. While the overall unbanked population hovers around 7%, this percentage increases for minority subsets of the population. For example, 20% of black households and 18% of Hispanic households are unbanked in the US. For households earning $15,000 or less annually, 27% are unbanked. These numbers point to a need for alternative financial options, like check cashing services.
Retail check cashers help bridge the gap through a la carte financial products and services. These include payroll check cashing, reloadable prepaid debit cards, fast online bill pay, money transfer, and money orders. Each of these services supports unbanked households by granting access to check cashing services and the ability to pay bills and use a debit card without a traditional checking account. For unbanked and underbanked households, checking accounts are out of reach for several reasons.
First, account minimums and associated fees (account maintenance and overdraft) make having a checking account too expensive. Second, a lack of bank branches in minority neighborhoods further hinders off financial inclusion. Luckily, retail check cashers are able to fill the void and help their communities perform routine financial transactions to keep their daily lives on track. Through retail check cashing services, unbanked households can pay their rent, purchase groceries, get a tank of gas, and send money to relatives in need
The benefits of retail check cashing also extend to the retail check cashers themselves. Small business owners can add check cashing to their location and build their fee-based revenue stream. Check cashing also increases the visibility of a business in its community and encourages new customers. This, in turn, drives foot traffic and presents business owners with an opportunity to cross sell their check cashing clients.
A variety of retail businesses can take advantage of the benefits associated with cashing checks. Convenience store check cashing is a popular business model that serves its community through fast and accessible shopping and financial services. Other forms of retail check cashing include liquor stores, beauty shops, gas stations, grocery stores, restaurants, and bodegas. Each of these businesses can use check cashing to drive revenue and expand their reach.
Savvy retail check cashers implement loyalty programs to increase repeat check cashing business and encourage their check cashing customers to shop at their store. The ideal time for a check casher to cross sell their customer is right as they are cashing a check. A check casher, for example, could offer a special discount or promotional product to check cashing clients who shop in the store during the same trip that they cash their check. This business strategy reinforces the small business as a community center and a beacon of convenience and service.
Retail check cashers rely on technology and risk management systems to build their successful check cashing operation. Unlike other money service businesses, retail check cashers are often unregulated. What’s the difference? MSBs and check cashers who cash over $1,000 in checks per day per customer are subject to state and federal regulation as licensed MSBs. Retail check cashers who cash less than $1,000 in checks per day per customer are not subject to regulation and operate as unlicensed MSBs. Smart retail check cashers still implement a strong compliance program and a robust check cashing process.
Rigorous compliance and streamlined process help mitigate fraud, which in turn helps retail check cashers secure and maintain a check cashing bank account. Without a real bank account, check cashers have no way to turn deposits into cash and provide check cashing services. To streamline the process, retail check cashers can install and use POS check cashing technology. These POS systems allow check cashers to register new customer, check them against a database, and record each metric for a transaction. This not only streamlines the process, but helps check cashers notice and address red flags during the check cashing process.
All retail check cashers should maintain a check cashing guide or handbook for employees. This can be used for employee training and referenced when an employee is unsure about a customer or transaction. The manual should outline the best practices for cashing checks to guide risk mitigation and refine the business model. When combined, these check cashing solutions can help retail businesses enjoy the benefits of adding financial services to their location.
The most important check cashing solution for retailers is a check cashing bank. Without a reliable check cashing bank account, business owners can’t cash checks for their customers. Due to derisking and the unintended consequences of AML regulation, many check cashers are finding themselves without a consistent bank account. To remedy this problem and keep check cashers open, NCC works with a network of financial partners. Our MSB friendly banks provide real bank accounts without the risk of unjustified termination.
How do we do it? Our comprehensive compliance strategy, POS check cashing systems, and team of check cashing experts keeps your check cashing location up and running. The NCC team is available 24/7 to help clients overcome operational challenges, improve compliance, and grow their business. As a result, our clients enjoy unwavering support and a system that allows them to spend more time focusing on their customers.
If you are ready to unlock your retail check cashing potential, reach out to us today by phone or fill out an “Open an Account” form. Our team will help you acquire a real check cashing bank account and the systems you need to take your business to the next level.