Millions of low-income Americans who don't have bank accounts are finding an alternative to check-cashing stores at kiosks inside big-box retailers, according to the Washington Post.
Kmart is testing check cashing, money transfers and prepaid cards in stores in Illinois, California and Puerto Rico, with plans to roll out the services nationally later this year. Best Buy installed kiosks in its stores for shoppers to pay utility, cable and phone bills. Wal-Mart deployed about 1,500 MoneyCenters that process up to 5 million transactions each week.
The retailers are mainstreaming a $320 billion industry of alternative financial services that has long operated in the shadow of the formal banking system and under the radar of federal regulators. The new Consumer Financial Protection Bureau was established in part to plug the gaps in oversight, but it remains unclear how much authority it will have over stores. One thing, however, does seem certain: Demand for alternative services is only expected to grow as strict new rules force banks to charge higher fees for checking accounts, placing them out of reach of many financially strapped households.
"We're in a place where large banks are becoming more conservative," said Kimberly Gartner, vice president of market services for the Center for Financial Services Innovation, a think tank. Meanwhile, "consumers are a little disgruntled with banks, so there's a real opportunity here to attract more customers."
