Check Cashing & Coin Conversion Industry Description

Companies that provide services such as payroll and other check cashing; money orders and funds transfer; and coin counting, wrapping, and exchange in return for paper money or vouchers.

Summary

The check-cashing industry may have been getting a bad rap.  The industry claims it serves the “unbanked.” Critics assert that it preys on the poor (customers typically have an annual household income of less than $25,000). Military personnel are also frequent customers. At the center of the argument are payday loans, which allow customers to receive anticipated money from an upcoming paycheck in return for a check postdated to their next payday. These short-term loans, which are usually less than $500, can carry interest rates of up to 20% (or an annual percentage rate of around 400%, plus fees) and can bind customers in a cycle of debt and borrowing if loans are rolled over. Payday loans are not allowed in 14 states, and about 20 others have placed ceilings on the amount that can be lent and the fees and interest rates that companies can charge.