This article appeared in the C-store Self-Service Executive Summary, Spring 2006.
C-store operators want to offer the convenience of check cashing, but they don't want to break their banks doing it.
At-the-counter check cashing is problematic. Retailers can take a lot of risk or get little return.
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Controlling risk has been the missing element among check-cashing solutions.
"The way they analyze that check will determine how successful they are at avoiding fraud or declining checks that should be cashed," said Dave Grano, chief executive officer of Portland, Ore.-based Vero Inc., a financial services technology company. "These applications are generally provided using a desktop POS machine. In that environment, the decision is made based on the company that wrote the check, and because that's a narrow analysis, it's hard to be completely protected from fraud."
It's not surprising, then, that most retailers are fed up with traditional check-cashing models, said Bryan Stewart, president of ATM Express, a California-based independent sales organization.
"Most of the stores we've talked to are beat up and worn out by it. They either don't have the cash flow at the counter or they don't want the liability of having the cash behind the counter to cash $10,000 a week in checks. And when it comes to bounced checks, they just don't want to mess with them."
So where's the value?
"I think many retailers recognize today that check cashing can be a profit center, because the check-cashing demand is growing, and they're now looking at how to do it with the highest possible impact and the lowest possible cost," Grano said.
To find that impact-to-cost balance, savvy retailers are moving check cashing away from the counter.
Show me the money
"Retailers are asking for a self-service solution because they think it's convenient, and because they have experienced problems using traditional store personnel in financial services," Grano said.
Innovative retailers know that in order to make check cashing viable, they have to move it over to a self-service terminal, said Dr. Hansup Kwon, CEO of Tranax Technologies Inc., a self-service technology provider.
"The self-service check-cashing model provides a range of benefits to the customer, including the flexibility for the retailer to define the business rules for the transaction, thereby allowing greater control of their risk exposure."
Vero has developed a self-service check-cashing solution that gives retailers more control over the approval process, which in turn offers higher return potential, Grano said.
"Our system analyzes not only the company that wrote the check, but also the check itself and the person who wrote it. We offer that retail location control over that decision, and putting control of the check-cashing decision into the hands of the retailer is critical."
