News

Wal-Mart begins offering check cashing services

June 13, 2004

PITTSBURGH - ATM providers hoping to get a chunk of the lucrative financial services market by providing check cashing and other services to the underbanked are facing a formidable challenger: Wal-Mart.

According to a report in the Pittsburgh Post-Gazette, the nation's biggest retailer earned approval from Pennsylvania regulators to begin offering check cashing on May 1. Wal-Mart, which had already been offering money orders and money transfers, is launching check cashing at stores in 44 states this spring; licensing is pending in six additional states.

The service is aimed at low-income consumers without bank accounts. Wal-Mart's fees significantly undercut typical corner check-cashing outlets, which often charge the highest fees allowed by state law.

Wal-Mart's fee is a maximum of $3 to cash payroll or government checks of up to $1,000. That compares with fees at the typical check-cashing outlet in Pennsylvania of $30 on a $1,000 payroll check and $25 on a similar-size government check, according to the Post-Gazette.

In Pennsylvania, check cashers are allowed to charge up to 2.5 percent of the face value on government checks, 3 percent on payroll checks and 10 percent on personal checks. Wal-Mart's fee is 1 percent, up to a maximum of $3. Wal-Mart does not cash personal checks, although it does accept them for store purchases.

In the Pittsburgh area, Wal-Mart isn't the only big retailer offering discounted check-cashing services. The region's dominant grocer, Giant Eagle, also cashes payroll and government checks for a similar price, although it requires customers to register for the service by applying for an Advantage Card.

At Wal-Mart, where check-cashing is available at designated registers, all that's necessary is a government I.D., such as a driver's license, military I.D. or Social Security card plus photo I.D., according to the Post-Gazette.

Fees for cashing government and payroll checks via CashWorks, which offers the service at ATMs through partnerships with Tritonand other manufacturers as well as on 1,000 Vcom terminals at 7-Eleven Stores, vary but are generally about 2 percent of a check's face value, according to earlier ATMmarketplace reports.