The idea of ​​using and writing checks has gone up a notch. Now, people are no longer required to go to banks to have the check cleared, deposited or cashed in the name of the person whose name it bears. A growing industry that offers check cashing services is now gaining traction to help people have quick access to cash when a check is written. The money service industry has gotten bigger and this is one of the latest additions to the range of services that can be taken advantage of.

So how does this check cashing system work?

Well, it’s relatively simple. A person whose name appears on the check can go directly to any of these cash check providers. The company will then have to do the necessary identity verification. The person may be asked to provide at least two identification cards and/or a bank account. After verification, you will be asked to endorse the check and the company will deposit the amount, less all deductions and the processing fee, directly into the bank account. Most check cashing businesses also offer affiliate businesses, such as payday loans, bill payment, and money order cashing. The processing fee may vary and some check cashing companies may also impose a minimum amount.

Advantages of using check cashing services

• This method is advantageous for people who do not have any existing bank account. Since banks tend to be relatively stricter on delivering cold cash, it would be more convenient to have the check endorsed by a legitimate company.

• Queues at banks can take a long time. Having to spend all morning in a bank is not only inconvenient, but would require a lot of effort, especially for those who work during banking hours.

• You can have quick access to your money even on a holiday. Most check cashing businesses are open seven days a week. They also often have online portals where your questions can be accommodated at any time of the day.

• If there are no check cashing stores near you, just go to Walmart. They offer check cashing for a minimal fee. A $3.00 fee is deducted on checks, payroll checks, money orders, and tax checks that are $1,000 or less. For larger amounts, a $6 fee is deducted. Note that they only cash checks with a maximum amount of $5,000. If you live far from Walmart, you may choose to check with major retailers near your area, such as 7-11.

• If you don’t have a bank account where you can deposit money, ask if the check cashing business offers a prepaid card loading system. This is another option. However, this would require an activation fee of less than $10 per card.

Disadvantages of Using Check Cashing Services

• Fees can be quite high. For example, losing 3% of the $5,000 check amount could instantly mean losing $150 dollars instantly.

• Bad checks can result in a significant legal problem for the person who requested the endorsement of the check.

• Not having the correct ID card can also be a problem. The teller may also challenge misspelled names and garbled handwriting on the check.

How to start a check cashing business?

Like any type of business, registration and licensing are paramount. There are federal policies as well as local or state policies that need to be considered. As a general policy, any business that involves charging a fee is included in the money services business or MSB. The company is required to use approved and controlled accounting methods. Also, you are expected to provide your list of agents and any reports that may be associated with money laundering cases. It is highly recommended to have an attorney help you with the process. Please note that in addition to federal and state laws, the business must also comply with the Patriot Act and the Bank Secrecy Act.

As part of the business establishment process, you should also identify your own checking policy, especially if you intend to expand one day. The policy essentially offers a quick list of what types of checks you’re willing to cash. Some examples are money orders, payroll, personal, business, out-of-state, or government checks. In addition to these, you should also identify what identification you will require your customers to show: driver’s license, government-issued, passport, or company ID.

Since money service businesses are also considered high risk, you just need to conceptualize what type of collection method you would employ. It is recommended that ‘cold cash’ not be used for any transaction. Debit cards and other PIN-enabled cards are also good options. It is recommended to load ATM or prepaid cards. Additionally, it would also be helpful to ensure that your establishment is equipped with a 24-hour security system, surveillance cameras, sensor-sensitive doors, and bullet-proof glass.