From Checks to Cash: The Basics of Check Cashing Services
The idea of using and writing checks has risen a bit higher. Now, people are no longer obliged to go to the banks to have the check cleared, deposited or cashed in the name of the person whose name it bears. A growing industry offering check cashing services is gaining traction to help people have quick access to cash when writing a check. The money services 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 is relatively simple. A person whose name appears on the check can go directly to any of these check cashing providers. The company will then need to carry out the necessary identity verification. The person may be asked to provide at least two identification cards and / or a bank account. Upon verification, you will be asked to endorse the check and the company will deposit the amount, minus all deductions and the processing fee, directly into the bank account. Most check cashing businesses also offer affiliate businesses, such as payday loans, bill payments, 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 existing bank accounts. Since banks tend to be relatively strict on cold cash delivery, it would be more convenient to have to endorse the check to a legitimate company.
• Queues at banks can be time consuming. Having to spend the whole morning in a bank is not only inconvenient, it would require a lot of effort, especially for those who work during banking hours.
• You can have quick access to your money even on holidays. Most check cashing companies are open seven days a week. They also usually have online portals where your questions can be accommodated at any time of the day.
• If there are no check cashing stores near your home, just go to Walmart. They offer check cashing for a minimal fee. A $ 3.00 fee is deducted for checks, payroll checks, money orders, and tax checks totaling $ 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 money can be deposited, 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 instantly.
• Bad checks can result in significant legal trouble for the person who requested endorsement of the check.
• Not having the correct ID card can also be a problem. The teller can also challenge misspelled names and illegible 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 for a fee is included in the money services business or MSB. The company must use approved and proven accounting methods. You are also expected to provide your list of agents and any reports that may be associated with money laundering cases. Having an attorney help you with the process is highly recommended. Please note that in addition to federal and state laws, the company must also comply with the Patriot Act and the Bank Secrecy Act.
As part of the process of establishing a business, you should also identify your own checking policy, especially if you intend to branch out one day. Basically, the policy offers a quick list of what kind of checks you are willing to withdraw. 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 would ask 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 kind of charging 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 ATMs or prepaid cards. In addition, it would also help to ensure that your establishment is equipped with a 24-hour security system, surveillance cameras, sensor-sensitive doors, and bulletproof glass.