A check cashing service is a company that enables clients to access their money without a bank account. These services allow people to cash their paycheck and other types of checks in exchange for a fee. They are a part of the financial services system for millions of Americans who are unbanked or underbanked.
The term “unbanked” refers to people who don’t have any sort of checking or savings accounts and generally do not interact with traditional financial service providers like banks.
Statistics have it that the United States Alternative Financial Services Market that checks cashing business is part of is estimated to be worth $41.5 Billion by 2025. Available data also shows that there are 4,604 Check Cashing & Payday Loan businesses in the US as of 2022, an increase of 3.3 percent from 2022.
Steps on How to Start a Check Cashing Services Company
Table of Content
Conduct Market Research
The first step in the market research process for your check cashing services company is to develop market-based research questions in line with your overall business goal and objective.
In this regard, you should source information that will help you maximize your business, information that will give you easy access to reliable business techniques and processes that will help you operate your check cashing services company with less stress and of course, build the business to profitability within the shortest time frame.
a. Who is the Target Market for Check Cashing Services?
- Unbanked or Underbanked
- Undocumented workers
- Entrepreneurs and Start-Ups
b. Is Check Cashing Service a Profitable Business?
Yes, a check cashing service is a profitable business because there are loads of unbanked or underbanked, startups and medium-scale businesses in the United States that rely on check-cashing companies to help them cash their checks.
c. Are There Existing Niches in the Industry?
No, there is no niche area in the check cashing services business because the business is a niche idea in the Alternative Financial Services industry.
d. Who are the Major Competitors?
- Check Cashing USA
- Hollywood Check Cashing
- The Check Cashing Place
- Eagles Check Cashing
- Cottman Check Cashing
- I & B Check Cashing
- The Check Cashing Store
- California Check Cashing Stores
- Check Into Cash
- PLS Check Cashers
- Quick Cash
- Valley Check Cashing
- Lee’s Check Cashing
- Check 2 Cash
- G D Check Cashing
- NNT Check Cashing
- Check `n Go
- EZ Money Check Cashing
- Alltown Check Cashing
- South Shore Check Cashing.
e. Are There County or State Regulations or Zoning Laws for Check Cashing Services?
No, there are no county or state regulations or zoning laws for check cashing services companies, but players in this industry are expected to work with the existing regulations governing similar businesses in the county or state where their business is domiciled.
It means that at any point in time, the county office can determine whether the check cashing company meets the zoning rules for the community, and that they are properly licensed.
f. Is There a Franchise for Check Cashing Services?
Yes, there are franchise opportunities for check cashing services companies. Here are some of them;
- United Check Cashing
- Cash Plus, Inc.
- ACE Cash Express
- Quick Cash Franchise
- Check Express.
g. What Do You Need to Start a Check Cashing Services?
- A Feasibility
- Business and Marketing Plans
- Business Licenses and Permits
- Office Space
- Computers, Laptops, and Servers
- EIN (Employer Identification Number)/Federal Tax ID Number.
- A Corporate Bank Account
- Software Apps
- Startup Capital
Choose a Memorable Business Name
When looking to start a business, before you can begin to file the necessary documents with the constituted authorities or start your website, it is necessary that you come up with a name that you will be recognized with. It is essential that the name you come up with can easily be pronounced, is unique and easily memorable.
Some of the catchy business name ideas suitable for a check cashing business are;
Creative Check Cashing Business Name ideas
- Ben Zeal© Check Cashing Services Company, Inc.
- Moore® Check Cashing Services Company, LLC
- Green Day© Check Cashing Services Company, Inc.
- Cash Solutions® Check Cashing Services Company, Inc.
- Penny Wise™ Check Cashing Services Company, Inc.
- Smith™ Check Cashing Services Company, LLC.
- Money Now© Check Cashing Services Company, LLC
- Cash Down® Check Cashing Services Company, Inc.
- Hilary Jorgen© Check Cashing Services Company, Inc.
- Kelly Gray© Check Cashing Services Company, Inc.
- Mike Kester® Check Cashing Services Company, Inc.
- Union Group® Check Cashing Services Company, Inc.
- TM Morris® Check Cashing Services Company, Inc.
- Tripple Pay® Check Cashing Services Company, Inc.
- Nathan Fred® Check Cashing Services Company, Inc.
- Rowland Hyden© Check Cashing Services Company, Inc.
- Cashier Monday™ Check Cashing Services Company, LLC
- Access Group® Check Cashing Services Company, Inc.
- West Payment® Check Cashing Services Company, Inc.
- Nile Group™ Check Cashing Services Company, Inc.
Register Your Business
a. What Type of Business Structure is Best for Check Cashing Services Company?
Even though there are several options when it comes to the business structure of a check cashing service, the one that most players in this line of business consider is an LLC. It is common to consider an LLC because providers want to protect themselves from lawsuits.
Please note that an LLC will need an EIN if it has any employees or if it will be required to file any of the excise tax forms listed below.
b. Steps to Form an LLC
- Choose a Name for Your LLC.
- File Articles of Organization.
- Choose a registered agent.
- Decide on member vs. manager management.
- Create an LLC operating agreement.
- Comply with other tax and regulatory requirements.
- File annual reports.
c. What Type of License is Needed to Open a Check Cashing Company?
- General Business License
- Zonal Permits (Applicable in some cities)
- Signage Permit
d. What Type of Certification is Needed to Open a Check Cashing Company?
You don’t need any special certification to start a check cashing company.
e. What Documents are Needed to Open a Check Cashing Company?
- Business and liability insurance
- Federal Tax Payer’s ID
- State Permit and Building Approval
- Certificate of Incorporation
- Business License
- Business Plan
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Contract Document
- Company Bylaws
- Memorandum of Understanding (MoU)
f. Do You Need a Trademark, Copyright, or Patent?
If you are considering starting a check cashing service, usually you may not need to file for intellectual property protection or trademark. This is so because the nature of the business makes it possible for you to successfully run it without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.
Cost Analysis and Budgeting
a. How Much Does It Cost to Start a Check Cashing Service?
When it comes to starting a check cashing service, the startup cost could range from $50,000 to over $250,000 depending on how big you want to start the business.
b. What are the Cost Involved in Starting a Check Cashing Services Company
- The total fee for registering a business in the United States of America – $750.
- Legal expenses for obtaining licenses and permits as well as the accounting services (software, P.O.S machines, and other software) – $3,300.
- Marketing promotion expenses for the grand opening of the check cashing service for $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for $3,580.
- The total cost for the purchase of insurance – $2,400.
- The cost for renting or leasing operational office space – $45,000.
- Other start-up expenses include commercial satellite TV subscriptions, stationery ($500), and phone and utility deposits ($2,800).
- Operational cost for the first 3 months (salaries of employees, payments of bills, and software renewal fees et al) – $15,000
- The cost for the purchase of software apps: $5,000
- Working capital – $50,000
- The cost for store equipment (cash register, security, ventilation, signage) – $1,750
- The cost of purchase and installation of CCTVs: $2,000
- The cost of launching a website: $2000
- Miscellaneous: $2,000
c. What Factors Determine the Cost of Opening a Check Cashing Services Company?
- The size of check-cashing services company
- The choice of location
- The required licenses and permits
- The type of facility
- The additional services offerings
- The cost for branding, promotion, and marketing of the check cashing service
- The cost for furnishing and equipping the facility
- The cost of the insurance policy covers
- The cost of registering the business
- The cost of recruiting and training your staff
- The cost of the purchase and customizing of uniforms
d. Do You Need to Build a Facility? If YES, How Much Will It Cost?
You don’t need to build a facility for your check cashing service because the business that can be operated from a leased or rented office space or home office. You may just decide to operate from your home and just lease a shared office space for corporate fronting.
e. What are the Ongoing Expenses of a Check Cashing Services Company?
- Bank charges
- Utility bills (internet subscriptions, phone bills, signage, and software renewal fees et al)
- Salaries of employees
f. What is the Average Salary of your Staff?
- Chief Executive Officer (President) – $45,000 Per Year
- Human Resources and Admin Manager – $35,000 Per Year
- Account Manager – $32,000 Per Year
- Marketing Sales Officer – $32,000 Per Year
- Check Cashing Officer – $30,000 Per Year
- Client Service Executive (Help Desk Office) -$28,000 Per Year
g. How Do You Get Funding to Start a Check Cashing Company?
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for a loan from your bank/banks
- Pitching your business idea and applying for business grants and seed funding from, the government, donor organizations, and angel investors
- Source for soft loans from your family members and friends.
Write a Business Plan
a. Executive Summary
Green Monday© Check Cashing Services Company, Inc. is a registered and licensed check cashing services company. The business will be bascanm, North Carolina and we are able to secure a well-positioned office facility in one of the most patronized office complexes in Durham.
We are well equipped to provide low-cost financial services at different locations throughout North Carolina. It is our goal to offer low rates and fast courteous service to our valued customers.
b. Products and Service
- Bill paying, Business check cashing, Cashier’s checks, Government benefits check cashing, Money orders, Payroll check, Payday loan services, and Selling money orders and traveler’s checks.
c. Mission Statement
Our mission is to provide professional and highly reliable check cashing services that will help businesses and individuals, especially the underbanked and unbanked, cash their checks seamlessly.
Our vision is to build a check cashing service that will become the number one choice for individuals, families, and corporate clients in Durham, North Carolina.
d. Goals and Objectives
The goals and objectives of the check cashing service are to allow people, especially the underbanked and unbanked to cash their paycheck and other types of checks in exchange for a fee.
e. Organizational Structure
- Chief Executive Officer (President)
- Human Resources and Admin Manager
- Account Manager
- Marketing and Sales Executives
- Check Cashing Officer
- Client Service Executive (Help Desk Office)
a. SWOT Analysis
- Effective structure in place
- Highly experienced and qualified employees and management
- Highly secured payment platform
- Access to finance from business partners
- Water-tight strategies on how to expand beyond the major markets
- Good returns on investment for our investors.
- Financial Constraints
- A new business that will be competing with well-established check cashing services and traditional banks
- Inability to retain our highly experienced and qualified employees longer than we want.
- Partnerships and mergers between established companies and cash checking services startups are becoming more frequent.
- Good support structure for check cashing service companies in the United States of America.
- The arrival of a new check-cashing service within our market space
- Unfavorable government policy and regulations.
- Differences in management and culture are the biggest barriers to integrating check cashing startups into traditional companies
- Liability problems
- Continuously changing consumer demands especially as it relates to how they expect check cashing companies to serve them.
b. How Do Check Cashing Services Companies Make Money?
Check cashing companies make money by charging clients commission on services such as bill paying, Business check cashing, Cashier’s checks, Government benefits check cashing, Money orders, Payroll checks, Payday loan services; and Selling money orders and traveler’s checks.
c. Payment Options
- Payment via bank transfer
- Payment via credit cards
- Payment via online bank transfer
- Payment via check
d. Sales & Advertising Strategies
- Introduce your check cashing services company and the services your offer by sending introductory letters alongside your brochure to corporate organizations, small business owners, and other key stakeholders throughout the city where your check cashing company is located.
- Advertise on the internet on blogs and forums, and also on social media like Twitter, Facebook, and LinkedIn to get your message across
- Creattoc website for your business so as to give your business an online presence
- Directly market your services
- Advertise your business in community-based newspapers, local TV and radio stations
- List your business on yellow pages ads (local directories)
- Encourage the use of word-of-mouth marketing (referrals)
a. How Much Should You Charge for your Product/Service?
The average fee for check cashing services varies by state, but typically it can be between 1% and 12% of the value of a check. For a $1,000 check, that’s a range of $10 to $120 simply to cash the check.
b. How Much Profit Do Check Cashing Services Company Owners Make a Year?
A smaller check cashing company owner will make between $50,000 to over $100,000 per year.
c. What Factors Determine the Amount of Profit to Be Made?
- The capacity of the check cashing services company
- The location of the check cashing services company is covering
- The management style of the check cashing services company
- The business approach of the check cashing services company
- The advertising and marketing strategies adopted by the check-cashing service
- The number of years the check cashing service is in business
d. What is the Profit Margin of a Check Cashing Services Company?
The profit margin of a check-cashing service is not fixed. It could range between 10% to 15% of the income earned by the funder per month.
e. What is the Sales Forecast?
Below is the sales forecast for a check cashing services company. It is based on the location of the business and other factors as it relates to such startups in the United States;
- First Fiscal Year (FY1): $350,000
- Second Fiscal Year (FY2): $480,000
- Third Fiscal Year (FY3): $600,000
Set Up your Office
a. How Do You Choose a Perfect Location for Check Cashing Company?
- The demography of the location especially as it relates to small and medium-scale businesses
- The demand for the services of check-cashing companies in the location
- The purchasing power of businesses and residents of the location
- Accessibility of the location
- The number of check-cashing services companies in the location
- The local laws and regulations in the community/state
- Traffic, parking and security et al
b. What State and City are Best to Open a Check Cashing Company?
- New York City, New York
- Los Angeles, California
- Brattleboro, Vermont
- Tucson, Arizona
- Silver Spring, Maryland
- Rowland Heights, California
- Portland, Oregon
- Richmond, Virginia
- Green Bay, Wisconsin
- Dallas, Texas
c. What Equipment is Needed to Operate a Check Cashing Company?
You should be prepared to purchase software solutions, computers or laptops, internet facility, telephone, fax machine and office furniture (chairs, tables, and shelves) amongst others, and all these can be gotten as fairly used.
When it comes to hiring employees for a standard Check cashing service, you should make plans to hire a competent Chief Executive Officer (President), Human Resources and Admin Manager, Account Manager, Marketing and Sales Officer, Check Cashing Officer, and Client Service Executive (Help Desk Office).
Launch the Business Proper
In recent times, no check-cashing service opens its door for business without first organizing an opening party to officially launch the business. You can choose to do a soft opening if you are operating on a low budget or you can go for a grand opening party.
The bottom line is that with a proper launching of the check cashing company, you will officially inform people in your city that your check cashing service is open for business.
a. What Makes a Check Cashing Services Company Successful?
- Ability to identify good deals
- Willingness to take chances
- Customer-centric business approach
- Good marketing and sales approach
- Strong vision
- Passionate leadership
b. What Happens During a Typical Day at a Check Cashing Company?
- The office is open for the day’s work
- The to-do list is reviewed
- Employees go straight to their job description (receiving and cashing checks)
- Marketers go all out to market the service of the company
- Reports are written and submitted to superior officers
- The business is closed for the day.
c. What Skills and Experience Do You Need to Build a Check Cashing Company?
- Excellent marketing skills
- Excellent computer skills
- Ability to Pay Attention to Details
- Good managerial and human development skills
- Good Accounting and Bookkeeping Skills
- Visionary Leadership
- Team-building & Interpersonal Skills.
- Excellent communication and negotiation skills.
- Organizational skills.
- Problem-solving ability.
- Good Supervisory skills
- Experience in managing check cashing related services business
- Experience in managing people
- Experience in business administration
- Experience in handling relevant software.