How to Start a Check Cashing Store
Check cashing stores provide a variety of financial services in exchange for a fee, often as much as 15 percent. In addition to cashing personal and government checks for customers who don't have a bank account or a conventional method for cashing their checks, check cashing stores often extend payday loans, offer money transfers, bill payment options, prepaid phones, and prepaid debit cards. Check cashing businesses are highly regulated; failure to ensure that your business adheres to regulations could cost you. You'll probably need financing; start with a business plan.
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Things You'll Need
- Location
- Zoning approval
- Licenses
- Insurance
- Security system
- Software
- Employees
Instructions
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Learn the federal and state regulations on check cashing stores and payday lending. Some states do not allow payday lending, and the majority of those that do have implemented interest caps, in addition to regulating the amount of money that can be loaned, the frequency in which money can be loaned, rollover and repayment fees. Additionally, the interest you may charge will vary depending on the type of check cashed.
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Find a safe, high-visibility location for your check cashing store within the radius of your anticipated clientele. Ensure that it is properly zoned.
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3
Apply for all required licenses via your state's licensing department. In addition to presenting business information about yourself and any managing members, be prepared to present financial statements verifying your personal financial health and maintain liquid assets. If necessary, register your Money Service Business with the Financial Crimes Enforcement Network, a division of the United States Department of the Treasury.
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Invest in a security system to protect your business and employees. Include bulletproof glass around your counters, a video surveillance system, and alarms. Purchase liability insurance.
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Invest in check cashing management software that uses biometrics to verify identity and conducts government check verification while offering access to check cashing databases. The software should also feature a variety of standard accounting tools to help you track employees and client transactions, and it should help you keep solid records.
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Hire trustworthy employees by implementing an extensive interview process, background checks, and credit card checks.
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Know your rights for recovering customer debt. Generally, you may follow up via phone with clients to recover money. If they refuse to pay up, you may decide to sue them or sell the debt to a collection agency.
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