Fact Sheet: The Licensed Check Cashing Industry in New York State

• There are approximately 530 licensed check cashing locations, also called financial service centers (FSCs).
• FSCs provide access to financial services to more 1million New Yorkers each year and also play a critical role in the economy through a multitude of financial services offered, including processing of payments.
• The industry cashes nearly 30 million checks annually with a value of between $11-12 B.
• The industry processes approximately 10 million customer bill payments annually totaling in excess of $1B. 
• The industry sells more than 6 million money orders annually with a face value of close to 1B.  
• The industry processes more than 3 million transfer transactions annually with a total value of more than $6M.   
• The industry is licensed by the NYS Department of Financial Services. Check cashing fees are set by the Department.
• The industry employs approximately 4,000 people and more than 80% (3,000) of the employees are minorities most notably from Black and Latino communities.

• Slightly younger than the general population. Primarily low-and-moderate income.
• 75% are employed full-time, and 68% maintain at least one traditional bank account. 

• Advocating industry positions before federal, state and municipal lawmakers and regulators
• Developing innovative new products and services to meet consumer needs
• Providing state-of-the-art education and compliance training programs for the industry
• Hosting the state’s only Annual Conference
• Sponsoring an annual scholarship program for New Yorkers pursuing post-secondary education
• Encouraging and recognizing members for outstanding community involvement

• Title X of Dodd-Frank Wall Street Reform and Consumer Protection Act
• Truth in Lending Act and Reg. Z
• Equal Credit Opportunity Act and Reg B
• Fair Credit Reporting Act and Reg. V
• Red Flags-Fair and Accurate Credit Transactions Act
• Gramm-Leach-Bliley Act and Reg. P
• Electronic Funds Transfer Act and Reg E
• Federal Arbitration Act
• Electronic Signatures in Global and National Commerce Act (Esign)
• NACHA Rules and Guidelines
• CAN-SPAM Act
• Fair Debt Collection Practices Act

• 98% rated overall service received between “excellent” and “good”
• 99% rated the hours of operation between “excellent” and “good”
• 100% rated store location between “excellent” and “good”
• 97% rated stores as having a safe environment between “excellent” and “good”
• 96/% believe stores do an “excellent” and “good” job of communicating all costs
• 99% rated stores as having the products they need between “excellent” and “good”
• 79% rated stores between “excellent” and “good” for charging reasonable fees
• 68% have either a checking or savings account
• 24% who no longer used banks or credit unions said they did not like them or had a bad experience with one; 15% cited high fees or minimum balance requirements
• 63% have been customers of a particular store for at least one year. Many (21%) had been customers for at least five years
• 75% have full-time jobs
• 39% are high school graduates; another 16% are college graduates
• 41% are African-American; 31% are Hispanic; 21% are Caucasian

 Licensed financial service centers (check cashers) provide total transparency in all consumer transactions. Customers know the costs of their transactions up front and can plan accordingly. No hidden fees or surprises follow at the end of the monthThis affords consumers tremendous peace of mind.

• Consumers pay approximately $30 billion in overdraft fees.[1]
• Bank earnings hit a record-high of $154.7 billion in 2013. 

• Overdraft fee revenue hit an all-time high of $37.1 billion in 2009,[2] and still generated $31.9 billion in overdraft revenues in 2013 despite the imposition of regulatory restrictions.[3]
• The average overdraft fee rose to a record high of $32.74 in 2013.[4]  

• Bank fees rose to record levels in 2006 when American consumers paid more than $36 billion in fees associated with their checking and savings accounts.[5]
• This raises questions about consumers' awareness of the terms and conditions of their bank accounts.
• Further, GAO staff posing as customers were unable to obtain detailed fee information and account terms and conditions at over one-fifth of visited branches and also could not find this information on the web sites of many institutions.
• While consumers may consider other factors in addition to cost when shopping for accounts, an inability to obtain information about terms, conditions, and fees hinders their ability to compare institutions.
• Bank fees and penalties deter New Yorkers who do not have a bank account from opening one and cause many that do to close accounts.  More than a third stop using bank accounts because of excessive fees and an additional fifth because of hidden fees.  “Lack of cultural competency and services in non-English language” are also barriers to providing financial services for banks. 
• This is in sharp contrast to the experience of customers at financial service centers (check cashers). Financial service centers clearly post all fees in easy-to-understand menu-style signs posted in store lobbies. Consumers know exactly what each transaction will cost before the transaction ever begins.
• The ready availability of this information is cited as one of the reasons why this “transaction” model of providing financial services is the choice for hundreds of thousands of New Yorkers every day.
• The fast, convenient, simple and transparent transactions offered by check cashers make them the financial service provider of choice for many New Yorkers, who many perceive “as having a higher and hidden fee structure.”[6]  

• The Netspend prepaid access cards (branded by Visa or MasterCard), act as virtual bank accounts, allowing consumers to store funds in a federally-insured account until needed. They also allow consumers access to electronic commerce.

• In 2005, the Financial Service Centers of America, the national trade association to which all FSCNY members also belong, and Netspend joined forces to provide real savings opportunities for consumers who previously did not have access to traditional financial institutions, or chose not to use them. The Netspend National Savings Program resulted, offering an interest-bearing, FDIC-insured savings account linked to a prepaid branded Visa debit card. The program remains the only one of its kind, offering competitive savings benefits and protections to all consumers without restriction.

• FDIC-insured savings accounts currently earning 5% annual interest (up to $5,000).[7]
• No minimum deposit to enroll in the program
• No minimum monthly balance to maintain and no monthly service fees
• Convenient access to savings through their Netspend All-Access Visa Prepaid Card

• The Netspend National Savings Program provides financial service center customers with a simple, secure and convenient savings vehicle, giving thousands of New Yorkers a safe place to keep their money while creating a savings fund for long-term financial empowerment.
• These consumers can now access electronic and other commerce, from which they were previously excluded because they did not have credit cards.

• More than 100,000 National Savings Program accounts have been opened nationwide.
• Participants have deposited more than $100 million into their savings accounts.

• FSCNY has offered this value-added network of check cashers in New York since 1994.
• With nearly 400licensed locations throughout New York State, including more than 300 locations conveniently located throughout New York City, PayNet provides employees of participating companies and customers of financial institutionsa conduit for delivering safe and convenient place to cash a payroll check, make a deposit, or conduct any number of other financial transactions.
• PayNetprovides thelargestnetworkoffinancial servicecentersinNewYork, offeringadegreeofaccess for financial services that isimpossibleto match.
• Numerous financial institutions and private and public employers, including the New York City Office of Payroll Administration, have utilized the PayNet network since its inception in 1994.

• PayNet Payroll Check Cashing Network represents an attractive alternative for financial institutions and companies to accommodate the payroll needs of their customers.
• FSCNY member locations offer expanded hours to accommodate varying work schedules (many are conveniently open seven days a week, with a significant number open 24 hours a day).
• PayNet Payroll Check Cashing Network provides customers, many of whom are living paycheck to paycheck, with immediate access to their funds.

• PayNet Deposit Network enables financial institution customers to perform basic financial services, such as making deposits, transferring funds, making withdrawals, and checking account balances, at many of our nearly 400 network locations in New York.
• Deposits are immediately credited to the customer’s account.
• The transaction process is simple for users to understand and, unlike an ATM, customers perform their transactions with live tellers.
• FSCNY member locations provide financial institutions with customer desired access and convenience through a vast network of locations and expanded hours of service.
• All a customer needs is a debit card from a PayNet participating financial institution and a government-issued photo ID. 

• According to a 2013 FDIC study (released in September 2014), 19.6% of all New York households (more than 600,000 NYC households) are considered “underbanked,” meaning they have a bank account but do most of their banking with alternative financial service providers such as FSCs.
• Nearly 10% (an estimated 310,000 households) of all New York households are “unbanked,” having no bank or credit union account relationship whatsoever. 
• In March 2010, the NYC Department of Consumer Affairs released findings from a study that revealed that more than 13% of NYC households are unbanked (i.e., more than 825,000 individuals).  

• Traditional financial institutions are often difficult to find in working class and minority neighborhoods, having concentrated their locations in middle and upper class suburbs.
•  In contrast, FSCs are deeply-integrated members of the local communities they serve.
• FSCs offer better hours to accommodate varying work schedules (many are conveniently open seven days a week, with some open 24 hours a day).

•  Low-income individuals sometimes need a higher level of interpersonal service not often found in traditional banks. They get that at a FSC.
• There is significant cultural aversion to using mainstream banks. Many immigrants come from cash-based cultures and are reluctant to trust banks with their money.
• The FSC staff speaks the language(s) of the neighborhood and offer a more family-friendly environment than traditional financial institutions.

• These consumers often lack the liquidity that is required to open and maintain traditional bank accounts.
• They live paycheck to paycheck and have little, if any, money to put into a bank.

• Low- and moderate-income consumers manage tight budgets and cannot be subject to surprise fees and back end charges.
• An unexpected charge can be catastrophic to a family’s finances.
• All fees charged by FSCs are posted and explained up front.
• All fees are paid at the time of the transaction, at the point of sale.

• Academic achievement;
• Demonstrated leadership in their school; and
• Demonstrated involvement in their community, contributing at least 50 valuable hours of volunteer service each year of high school.

• Applicants must be seniors attending from public high schools in New York City’s five boroughs and the surrounding New York counties.

• Scholarship winners receive a minimum $2,000 cash grant to be applied towards their freshman year of studies at a college or university of their choice. The annual top award is $7,500.

• MoneyGram Internationalis thestate-wide co-sponsor of the program.
• The scholarship program also is generously supported by a wide range of FSCNY members who understand that investing in New York’s future is in everyone’s best interests.

 Fact Sheet: Key Community Initiatives

• Virtually all FSCNY members remained open for business during and immediately after Superstorm Sandy, providing critical financial services to New Yorkers.
• Immediately following the Storm, FSCNY initiated an industry-wide fundraising campaign through which participating member stores donated $3 to the American Red Cross for every FEMA disaster assistance check cashed in their locations.  In addition, FSCNY members offered their stores to local officials as a resource for recovery programs. They served as distribution centers for information and as impromptu meeting halls for officials and area residents. 

• FSCNY partnered with Western Union on a collaborative fundraising effort under which the Western Union Foundation would match funds raised by FSCNY members. 
• Mobilizing employees and customers in the aftermath of the earthquake, FSCNY members raised nearly $150,000 for the FSCNY Haiti Relief Fund.
• The money was collected through in-store collections at hundreds of check cashing locations across the state and from direct donations from company owners.
• With Western Union matching funds raised by FSCNY, the total amount of money raised by the industry for Haitian relief was nearly $300,000
• All funds contributed through this initiative were donated to Mercy Corps.

• FSCNY initiated the My Money & Me – Becoming A Money Smart Kid financial education initiative.
• This initiative, a collaboration with American Credit Alliance (ACA) and New York City’s Department of Education,provides educational tools to elementary school teachers to help them instruct young students about saving, spending and sharing money
• More than 2,500 students from 25 schools in Manhattan, Brooklyn and the Bronx received a unique financial education through this program.

• In 2012, FSCNY re-launched its voter registration program – “Democracy for All” – aimed at encouraging all New Yorkers to register to vote.
• FSCNY member stores actively supported the voter registration drive.

• Participating members posted decals and posters in their stores urging customers to register to vote.
• Registration forms were available at all participating stores.
• Completed forms were collected at the participating stores and submitted to the New York State Board of Elections