The Check Cashing Industry: Size and Growth

The check cashing industry is a financial services industry which services the collective needs of individuals who do not have access, for whatever reason, to traditional banking services.

The check cashing component of this particular segment of the financial services industry actually comprises but one sub-segment of a fringe economy that consists of a series of financial services for individuals who lack traditional commercial banking services:

• Check cashing stores: these operations are often located in low income neighborhoods and cash checks; such as government aid checks, for a fee
  
  
• Payday loan companies: these stores provide small, short-term loans that allow borrowers to cover their short-term living expenses and are offered with extremely high interest rates
  
  
• Refund anticipation loans: these products are usually offered by check cashing or payday loan companies and offer consumers a short-term loan in the amount of their expected tax refund plus a fee
  
  
• Money wire/transfer companies: companies such as Western Union have created a thriving business moving money for people such as for bill payment or to send money internationally and they make their profit based on a percentage fee of the amount being moved
  
  
• Pawnshops: pawnshops are increasingly being used by the financial underserved as a way to fund short-term emergency expenditures and are stores that offer small, short-term loans for various merchandise
  

Considering the growing number of people living at or below the poverty level in the United States, this is a growing customer population that is making increasing use of all these types of services and in particular the check cashing services as a means to survive a difficult and unforgiving economy.