PHILADELPHIA – Do 25-30 million Americans represent a market segment for credit unions? This is the number of Americans that use check cashing outlets, according to a Filene Research Institute study that shows that the average check cashier has a steady income, tends to be non-white and under the age of 24. For a variety of reasons – some based on culture, convenience or distrust – millions use alternative financial providers, the study discovered. Forty representatives from more than 20 mostly large, community-chartered Pennsylvania credit unions recently attended a day-long session held by Filene and the Pennsylvania Credit Union League on the `ABCs of Check Cashing: An Opportunity For Credit Unions.’ The workshop sought to explore the perimeters of serving those who rely on check-cashing outlets and to highlight the compliance and regulatory components needed to serve the underserved. Filene Executive Director Bob Hoel told the group that successful check cashiers are those that develop a relationship with their customers, which tend to be repeat customers. A very large segment of check cashing users are immigrants – and currently the U.S. has more immigrants than ever in history, the study revealed. “Successful check cashiers understand their demographics and cater to their needs, particularly in providing bilingual tellers and materials,” Hoel said. Workshop participants were provided with the compliance and regulatory issues that apply to check cashing for federal and state chartered credit unions by Rick Wargo, the league’s senior vice president/general counsel. Wargo also addressed the option of creating a credit union service organization by one or more credit unions to provide check cashing services to both members and non-members. Bill Rupertus, division manager at CUNA Mutual Group discussed the related insurance issues credit unions would need to consider should they start check cashing services. In addition to check cashing, many outlets venture into other services, such as money transfers, bill payment services (i.e. money orders, wires, utility payments) and sundries (envelopes with stamps, phone cards, public transportation ticket services). It is also common for check cashiers to offer payday lending. Filene’s statistics indicate that ideal check cashing locations are strip centers with visibility, on routes to/from jobs, near cash businesses (i.e., grocery stores, restaurants, stores) and close to apartment complexes. The Filene Institute is actively seeking to pilot a check cashing program with credit unions nationwide. Several Pennsylvania credit unions have expressed “strong interest” in participating in the program, said Mark Meyer, Filene’s director of innovation. The first step of the program will be to assess business and philosophical needs including fee income, potential increased membership and offering services at lower rates to the underserved or unserved. A follow-up session will be held in Madison, Wis. on March 12 with the aim to set up 10 pilot check-cashing stores in various states by the end of the year. States with the least regulatory restrictions on check-cashing operations such as Wisconsin, Pennsylvania and several other Midwest states are being looked at, Meyer said. After the March 12 session, a more definitive plan will be implemented with the names of credit unions that have committed to participating in the pilot. Pennsylvania’s workshop is a follow-up to a state credit union summit attended by Hoel and held last September for credit unions with more than $100 million in assets. Several credit unions said they would be interested in offering check-cashing services, which prompted Filene to research its current findings. League officials from various states also toured a check-cashing operation last winter run by eight Wisconsin credit unions in conjunction with the release of a Filene study, “Check Cashing and Savings Program for Low-Income Households – An Action Plan for Credit Unions.” There are more than 10,000 check-cashing outlets nationwide, with 180 million checks processed annually at a value of $55 billion, according to the Financial Service Centers of America, an industry group. -

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