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Doug Krizner: Those too poor to have a bank account rely on storefront check cashers. The high fees make it a lucrative business.
And now, a growing number of banks, including Wal-Mart, are cashing in on the business. From WCPN in Cleveland, Mhari Saito reports.
Mhari Saito: Lacretia Banks has bounced way too many checks, damaged her credit rating and now can’t get a bank account. But KeyBank, a giant based in Cleveland, wants customers like her.
Lacretia Banks unzips her purse and pulls out nearly $4 to cash her $250 paycheck at Key, even though she doesn’t have an account.
Lacretia Banks: You’re in and you’re out. When you go to a bank, you’re in and you’re out. And with other check cashers, their fees are too high.
Americans spend $11 billion every year on check cashing, money wiring, and utility payments. More mainstream financial services have noticed that’s an attractive chunk of change.
KeyBank’s Michael Griffin:
Michael Griffin: We were seeing check-cashing places pop up on every corner, and thought, you know, we’re a bank — we can do that better than they can do that. So why wouldn’t we get into this business and really approach the un-banked as a market segment?
US Bank is also expanding cheap check-cashing services.
And it’s not just banks courting the un-banked. Wal-Mart has been cashing paychecks at customer service desks for years.
But now, Wal-Mart’s John Metz says, the company is boosting demand by offering separate financial-service desks.
John Metz: When we separate these businesses, we see a huge up-tick in the money services.
Wal-Mart plans to open 1,000 MoneyCenters by next year.
Jean Anne Fox at the Consumer Federation of America says this can help un-banked clients get back on financial track.
Jean Fox: Just cashing checks for consumers at a lower price then you would pay at a storefront check casher, I mean that’s an improvement. But we want to graduate folks to having real depository accounts, as long as they’re safe to use.
That’s ultimately KeyBank’s goal, and it’s working with a nonprofit to help customers improve their credit. So far, Key has served 10,000 check-cashing clients, and is waiting to see how many will move into other bank products.
In Cleveland, I’m Mhari Saito for Marketplace.
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