What It Means
Check-cashing organizations (CCOs), commonly known as check-cashing stores, are business outlets that cash checks for a fee. They cash a variety of checks, including payroll checks, personal checks, government checks (such as Social Security checks), income-tax refunds, insurance checks, money orders, and cashier’s checks (the latter two are different kinds of prepaid vouchers that can be purchased in order to make a payment to a third party; both are commonly used in lieu of personal checks). Many check-cashing stores also offer various secondary services, including payday loans (small, short-term loans that are intended to be repaid on the borrower’s next payday), money transfers, and bill paying (wherein a customer can pay his or her utility bill and other bills through the CCO). Some outlets also sell money orders, lottery tickets, bus passes, fax-transmission services, prepaid phone cards, and postage stamps.
In the United States the clientele at check-cashing stores are predominantly low-income and working-poor individuals, many of whom belong to minority ethnic groups. Most do not have accounts with traditional financial institutions such as banks. People who are either unwilling or unable to do business with banks are often described as “unbanked.” In 2006 the Federal Reserve Board (a committee that oversees the Federal Reserve, the central banking system of the United States) estimated that nearly 13 percent of U.S. families did not hold a checking account. Substantial research has been conducted to understand why this population tends to avoid traditional financial institutions. Continue reading “The check-cashing industry has grown tremendously since the mid-1980s”