Check Cashing Business

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erik265
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Check Cashing Business

Post by erik265 »

Is check cashing business profitable. I hear good location can offer strong cash flow. I also hear there are a ton of bad checks out there so lots of risk as well. Do you want to profit off the misfortune of others. Thoughts?
Silk McCue
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Re: Check Cashing Business

Post by Silk McCue »

I wouldn't want to own one. I made that personal decision to exclude these and other hardship businesses from consideration years ago when I was looking for a business. I also wouldn't want anyone I know to work there as I believe that the risk associated with this business increases the likelihood of having a gun pointed at your face.

Cheers
obgraham
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Re: Check Cashing Business

Post by obgraham »

You deal with a segment of the population I'd just as soon avoid.
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Watty
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Re: Check Cashing Business

Post by Watty »

I would be suspect that they will go the way of the video rental stores and travel agencies that used to be in almost every strip mall.

The future of paper checks is not bright.

They are being replaced by a number of person to person payment apps, online payments, and I think that most large employers will set up employees with a special company provided debit card if they do not have a bank account.

In some countries paper checks are basically never used now.
Clarice
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Re: Check Cashing Business

Post by Clarice »

Watty wrote: Thu Dec 12, 2019 1:00 pm I would be suspect that they will go the way of the video rental stores and travel agencies that used to be in almost every strip mall.

The future of paper checks is not bright.

They are being replaced by a number of person to person payment apps, online payments, and I think that most large employers will set up employees with a special company provided debit card if they do not have a bank account.

In some countries paper checks are basically never used now.
This is wrong.

People cash checks at a check casher because they cannot get a bank account. Your bank history follows you as much as your credit score does - so if you burn Wells it is likely that JPM won’t allow you to bank there either. Also, illegal immigrants can’t get a bank account because they don’t have a social. Then there are the customers that just generally dislike banks altogether.
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RickBoglehead
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Re: Check Cashing Business

Post by RickBoglehead »

My observation is that check cashing services are abundant in areas of towns that I wouldn't want to be in without security, because of the clientele.

I also notice that they're all heavily fortified.

No thanks.
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Topic Author
erik265
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Re: Check Cashing Business

Post by erik265 »

Do you really need to be there or can you have a manager. Or is it a business you have to watch over all the time?
Silk McCue
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Re: Check Cashing Business

Post by Silk McCue »

erik265 wrote: Thu Dec 12, 2019 1:42 pm Do you really need to be there or can you have a manager. Or is it a business you have to watch over all the time?
Good luck finding reliable workers. If you think for a moment that you will be immune to the problems that every employer has or that you will find someone really good to the job you are wrong. Business is hard and one like this is going to keep you engaged on a regular basis with the police, insurance companies when you file claims, workers comp issues and ...

If you aren't a very experienced business owner don't even think about it.

Cheers
barnaclebob
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Re: Check Cashing Business

Post by barnaclebob »

I'd probably become a bounty hunter before owning a check cashing place.
FrugalConservative
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Re: Check Cashing Business

Post by FrugalConservative »

obgraham wrote: Thu Dec 12, 2019 12:43 pm You deal with a segment of the population I'd just as soon avoid.
This +1
HomeStretch
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Re: Check Cashing Business

Post by HomeStretch »

Have you done any research on this type of business, looked for a good location, checked out the local competition, researched federal/state/local regulations, etc.?
bob60014
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Re: Check Cashing Business

Post by bob60014 »

Why does money laundering, come to mind?
02nz
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Re: Check Cashing Business

Post by 02nz »

obgraham wrote: Thu Dec 12, 2019 12:43 pm You deal with a segment of the population I'd just as soon avoid.
I'd say: You deal with a segment of the population I'd just as soon avoid exploiting.
WJW
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Re: Check Cashing Business

Post by WJW »

Not a business I understand or would want to be involved in for all the reasons stated. Besides how does check cashing make money, % of transaction? What if you get one bad check, seems it would wipe out profit from several other "profitable" transactions.
sailaway
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Re: Check Cashing Business

Post by sailaway »

Are there check cashing businesses that are not also payday loan businesses?

I couldn't find any online.
Clarice
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Re: Check Cashing Business

Post by Clarice »

sailaway wrote: Thu Dec 12, 2019 3:19 pm Are there check cashing businesses that are not also payday loan businesses?

I couldn't find any online.
Check out Amscot in FL.
sailaway
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Re: Check Cashing Business

Post by sailaway »

Clarice wrote: Thu Dec 12, 2019 3:32 pm
sailaway wrote: Thu Dec 12, 2019 3:19 pm Are there check cashing businesses that are not also payday loan businesses?

I couldn't find any online.
Check out Amscot in FL.
Even their own website says that the Amscot Cash Advance is also known as a pay day loan.
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Sandtrap
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Re: Check Cashing Business

Post by Sandtrap »

There is a potential "side" to a check cashing business, "pay day" loans, etc, that can get "interesting".
Paired with a pawn shop and that "collateral loan" business, can also get "interesting"

I've known a few that have done well in these businesses. Some, very very well.

But, you do have to be on location a lot to work the business and guard your interests.

j :happy
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Stinky
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Re: Check Cashing Business

Post by Stinky »

WJW wrote: Thu Dec 12, 2019 3:17 pm Not a business I understand or would want to be involved in for all the reasons stated.

Besides how does check cashing make money, % of transaction? What if you get one bad check, seems it would wipe out profit from several other "profitable" transactions.
I agree.

I've never understood the economics of the check cashing business. Not that I've really tried hard to find out about it.
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gr7070
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Re: Check Cashing Business

Post by gr7070 »

It's a predatory business. I wouldn't want to associate with the owner of such a business, let alone be one. It's the Mos Eisley spaceport of businesses: you will never find a more wretched hive of scum and villainy - still talking about the owners.
Chuck5781
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Re: Check Cashing Business

Post by Chuck5781 »

Clarice wrote: Thu Dec 12, 2019 1:13 pm
Watty wrote: Thu Dec 12, 2019 1:00 pm I would be suspect that they will go the way of the video rental stores and travel agencies that used to be in almost every strip mall.

The future of paper checks is not bright.

They are being replaced by a number of person to person payment apps, online payments, and I think that most large employers will set up employees with a special company provided debit card if they do not have a bank account.

In some countries paper checks are basically never used now.
This is wrong.

People cash checks at a check casher because they cannot get a bank account. Your bank history follows you as much as your credit score does - so if you burn Wells it is likely that JPM won’t allow you to bank there either. Also, illegal immigrants can’t get a bank account because they don’t have a social. Then there are the customers that just generally dislike banks altogether.

True. Today. But a free market solves problems like this, and many new innovative money transfer solutions are coming that may eliminate the need for a traditional bank account. Prepaid cards, stored value in apps, etc. have the potential to help solve the problems the “unbanked” face.

But for today, sadly, there are a large number of people who unfortunately need the services of a check cashing business. And a lot of unsavory folks running check cashing businesses looking to take advantage of those people.

I sure wouldn’t want to meet my Maker and explain this was how I made a living.
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ClevrChico
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Re: Check Cashing Business

Post by ClevrChico »

There definitely is a customer base for these businesses. Customers would include the under-banked and those trying to avoid garnishment.

Your competition would include Wal-Mart that offers very low fees for check cashing.

Yes, it's the most un-boglehead way for people to bank, but it meets a need.

The convenience stores with bad security are robbed here weekly, but the check cashing stores here are never robbed. (Likely due to good security and hours.)
Last edited by ClevrChico on Fri Dec 13, 2019 9:59 am, edited 2 times in total.
FrugalConservative
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Re: Check Cashing Business

Post by FrugalConservative »

gr7070 wrote: Thu Dec 12, 2019 4:02 pm It's a predatory business. I wouldn't want to associate with the owner of such a business, let alone be one. It's the Mos Eisley spaceport of businesses: you will never find a more wretched hive of scum and villainy - still talking about the owners.
Playing devils advocate here, but how exactly would those that are less fortunate cash their checks without payday/check cashing services?
arf30
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Re: Check Cashing Business

Post by arf30 »

I've read that the rise of prepaid debit cards (AMEX Bluebird, etc) have skimmed off the "top layer" of the unbanked, leaving the higher risk people who don't qualify for any banking services (or are avoiding them) remaining for check cashing and similar services to fight over.
Chuck5781
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Re: Check Cashing Business

Post by Chuck5781 »

FrugalConservative wrote: Thu Dec 12, 2019 4:51 pm
gr7070 wrote: Thu Dec 12, 2019 4:02 pm It's a predatory business. I wouldn't want to associate with the owner of such a business, let alone be one. It's the Mos Eisley spaceport of businesses: you will never find a more wretched hive of scum and villainy - still talking about the owners.
Playing devils advocate here, but how exactly would those that are less fortunate cash their checks without payday/check cashing services?
Simply my opinion, but this is a case where two things are true at the same time - the service is vital for the customers, and the nature of the business attracts unscrupulous owners.
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J295
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Re: Check Cashing Business

Post by J295 »

FrugalConservative wrote: Thu Dec 12, 2019 4:51 pm
gr7070 wrote: Thu Dec 12, 2019 4:02 pm It's a predatory business. I wouldn't want to associate with the owner of such a business, let alone be one. It's the Mos Eisley spaceport of businesses: you will never find a more wretched hive of scum and villainy - still talking about the owners.
Playing devils advocate here, but how exactly would those that are less fortunate cash their checks without payday/check cashing services?
By walking into a bank and presenting the check and walking out with cash. I don’t have bank regulatory expertise, so perhaps this would require regulatory or other legal action to facilitate. However, implementing such seems quite reasonable and helpful to those most in need. I suspect the lobbying interests of both banks and pay day lenders would have a different perspective.
Millennial
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Re: Check Cashing Business

Post by Millennial »

02nz wrote: Thu Dec 12, 2019 3:17 pm
obgraham wrote: Thu Dec 12, 2019 12:43 pm You deal with a segment of the population I'd just as soon avoid.
I'd say: You deal with a segment of the population I'd just as soon avoid exploiting.
Thanks for posting this, I was scrolling to make a similar suggestion.
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Summit111
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Re: Check Cashing Business

Post by Summit111 »

One of my neighbors owned one. It was a check cashing and payday loan business. He was in it for around 7 to 8 years, but got out because of the security issues and nonpayment of loans. His office building was highly fortified to prevent robberies, but he was robbed several times after hours when he was leaving the business.

While it was a highly profitable business, it was too much stress, and dangerous for him to stay in it. He found no buyers for it when he shut it down. It’s an empty building now.

Summit
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Teague
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Re: Check Cashing Business

Post by Teague »

Millennial wrote: Thu Dec 12, 2019 6:17 pm
02nz wrote: Thu Dec 12, 2019 3:17 pm
obgraham wrote: Thu Dec 12, 2019 12:43 pm You deal with a segment of the population I'd just as soon avoid.
I'd say: You deal with a segment of the population I'd just as soon avoid exploiting.
Thanks for posting this, I was scrolling to make a similar suggestion.
Agreed. Around here these operations are typically combined with Western Union type money wire services. The customers are mostly hard working farm laborers, cashing their checks every Friday and sending much or most of their earnings back home to support their families. Which takes a lot of character in my book.

But there will be the very occasional bad actor who doesn't want to actually work for a living, and it's not the sort of business I'd want to own due to the risks already mentioned.
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Broken Man 1999
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Re: Check Cashing Business

Post by Broken Man 1999 »

Being un/under-banked is sometimes by choice. I've had some aides over the years who were recent immigrants, and some were very mistrustful of banks. I suppose in their native countries there were problems they had encountered.

One told me about how a number of people would give equal weekly amounts to someone they trusted, and when the collected amount was a certain size, the people contributing would receive the "pot" on a rotating basis. So, I wonder how much that trusted individual was skimming off the pot. Or, maybe he/she was just being nice.

Amscot has a lot of places around the Tampa Bay area.

Here is a link to their fee schedules:

https://www.amscot.com/resources/check_ ... _rates.pdf

Broken Man 1999
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WJW
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Re: Check Cashing Business

Post by WJW »

barnaclebob wrote: Thu Dec 12, 2019 2:52 pm I'd probably become a bounty hunter before owning a check cashing place.
Makes me think of Dog the Bounty Hunter. Bounty Hunting sounds more fun than check cashing.
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Re: Check Cashing Business

Post by whodidntante »

I think it's a great idea. But you'll want to add a gentleman's club, a liquor store, and a legal dispensary to diversify your portfolio.
WJW
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Re: Check Cashing Business

Post by WJW »

whodidntante wrote: Thu Dec 12, 2019 7:11 pm I think it's a great idea. But you'll want to add a gentleman's club, a liquor store, and a legal dispensary to diversify your portfolio.
And don't forget some sort of gambling establishment.
Last edited by WJW on Thu Dec 12, 2019 7:30 pm, edited 2 times in total.
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whodidntante
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Re: Check Cashing Business

Post by whodidntante »

WJW wrote: Thu Dec 12, 2019 7:14 pm
whodidntante wrote: Thu Dec 12, 2019 7:11 pm I think it's a great idea. But you'll want to add a gentleman's club, a liquor store, and a legal dispensary to diversify your portfolio.
And don't forget some sort of gambling establishment.
That would be the core position. :happy
L82GAME
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Re: Check Cashing Business

Post by L82GAME »

Millennial wrote: Thu Dec 12, 2019 6:17 pm
02nz wrote: Thu Dec 12, 2019 3:17 pm
obgraham wrote: Thu Dec 12, 2019 12:43 pm You deal with a segment of the population I'd just as soon avoid.
I'd say: You deal with a segment of the population I'd just as soon avoid exploiting.
Thanks for posting this, I was scrolling to make a similar suggestion.
+1
Oakwood42
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Re: Check Cashing Business

Post by Oakwood42 »

Clarice wrote: Thu Dec 12, 2019 1:13 pm
Watty wrote: Thu Dec 12, 2019 1:00 pm I would be suspect that they will go the way of the video rental stores and travel agencies that used to be in almost every strip mall.

The future of paper checks is not bright.

They are being replaced by a number of person to person payment apps, online payments, and I think that most large employers will set up employees with a special company provided debit card if they do not have a bank account.

In some countries paper checks are basically never used now.
This is wrong.

People cash checks at a check casher because they cannot get a bank account. Your bank history follows you as much as your credit score does - so if you burn Wells it is likely that JPM won’t allow you to bank there either. Also, illegal immigrants can’t get a bank account because they don’t have a social. Then there are the customers that just generally dislike banks altogether.

+1 Legal and illegal migrants sent $53.4 billion in remittances back to Mexico and Central America in 2018, or more than double the cost of building a border barrier on the U.S.-Mexico border, according to a World Bank report.
drawpoker
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Re: Check Cashing Business

Post by drawpoker »

whodidntante wrote: Thu Dec 12, 2019 7:18 pm
WJW wrote: Thu Dec 12, 2019 7:14 pm
whodidntante wrote: Thu Dec 12, 2019 7:11 pm I think it's a great idea. But you'll want to add a gentleman's club, a liquor store, and a legal dispensary to diversify your portfolio.
And don't forget some sort of gambling establishment.
That would be the core position. :happy
To be well-diversified you would want to include a bail bonds business with catchy name. "Aces High Bail Bonds"
Last edited by drawpoker on Thu Dec 12, 2019 7:26 pm, edited 1 time in total.
Oakwood42
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Re: Check Cashing Business

Post by Oakwood42 »

Broken Man 1999 wrote: Thu Dec 12, 2019 6:58 pm Being un/under-banked is sometimes by choice. I've had some aides over the years who were recent immigrants, and some were very mistrustful of banks. I suppose in their native countries there were problems they had encountered.

One told me about how a number of people would give equal weekly amounts to someone they trusted, and when the collected amount was a certain size, the people contributing would receive the "pot" on a rotating basis. So, I wonder how much that trusted individual was skimming off the pot. Or, maybe he/she was just being nice.

Amscot has a lot of places around the Tampa Bay area.

Here is a link to their fee schedules:

https://www.amscot.com/resources/check_ ... _rates.pdf

Broken Man 1999
"....Being un/under-banked is sometimes by choice. I've had some aides over the years who were recent immigrants, and some were very mistrustful of banks. I suppose in their native countries there were problems they had encountered."

This is accurate. Think about if you came from Venezuela to America. Do you think your outlook on banks may have been affected by your experience?
WJW
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Re: Check Cashing Business

Post by WJW »

drawpoker wrote: Thu Dec 12, 2019 7:24 pm
whodidntante wrote: Thu Dec 12, 2019 7:18 pm
WJW wrote: Thu Dec 12, 2019 7:14 pm
whodidntante wrote: Thu Dec 12, 2019 7:11 pm I think it's a great idea. But you'll want to add a gentleman's club, a liquor store, and a legal dispensary to diversify your portfolio.
And don't forget some sort of gambling establishment.
That would be the core position. :happy
To be well-diversified you would want to include a bail bonds business with catchy name. "Aces High Bail Bonds"
And a brothel to round things out.
Last edited by WJW on Thu Dec 12, 2019 7:51 pm, edited 1 time in total.
Trader Joe
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Re: Check Cashing Business

Post by Trader Joe »

erik265 wrote: Thu Dec 12, 2019 12:04 pm Is check cashing business profitable. I hear good location can offer strong cash flow. I also hear there are a ton of bad checks out there so lots of risk as well. Do you want to profit off the misfortune of others. Thoughts?
No, I would never profit off of the misfortune of others.
hookemhorns
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Re: Check Cashing Business

Post by hookemhorns »

I met someone once who owned about a dozen franchise locations for a check cashing chain (Ace or one of those). He did very well for himself but it was a lot of work. He said you have to hire trustworthy people and be deeply involved in managing each store given the risk of fraud, theft, and high turnover. His stores were located in an area with a lot of immigrants performing seasonal agriculture work, which I would think is a natural market for these types of businesses.

Beyond any moral qualms, there is high political risk. Generally speaking, one party wants to clamp down on immigration and the other wants to legalize it and hates these types of businesses. Neither trend is great for this industry. I think it can be a great business with the combo of right person, location, and cross-sell of related services i.e. payday loans, pawn, and remittances, but the risk will always be high.
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