Check Cashing Industry Booms in Mississippi By Mary Ellen Powell
Contributing Writer, Delta Business Journal
  The check cashing industry is growing in this state with 697 check cashing businesses currently in existence.
As the industry booms, customers and business owners alike can take advantage of the protection offered by law-enforced regulations.
  The services provided by these businesses include the cashing of checks of any type with a certain percentage fee charged according to the type of check being cashed.  The main service rendered, however, is Deferred Deposit check cashing, or a payday loan.  Using this service a customer can right a check for the amount needed including a service fee of 18 percent of the face amount, the business holds the check for 14 days and then either deposits the check or the customer pays back the amount.
  This relatively new industry, only in existence for the last seven to eight years, has seen tremendous growth and within the last two years has come under state regulations established through a law passed in 1998.
  Dan Robinson owns 27 check-cashing locations of Cash, Inc., with three in the Delta.  As past president of the Mississippi Check Cashing Association, Robinson has seen the evolution of the industry and has not only welcomed the regulations, but worked with other association members and state officials to encourage the establishment of these guidelines for operation.
  "We were involved in the industry before and throughout the regulation process and had to go to the Legislature for four to five years before the law was passed to regulate the industry."
  "Regulation has really helped both the industry and the consumer and we are very enthusiastic about the regulations because they offer good consumer protection," Robinson said.
The Mississippi Department of Banking and Consumer Finance is also very pleased with the law governing these businesses.
  "This is a new business and we want to make sure that it is operated right within the confines of the law set by the Legislature," said Ronny Parham, Commissioner of the Mississippi Department of Banking and Consumer Finance. "We have a strong law and want to make sure that everyone abides by it."
  In recent months the department has begun its examination process of businesses, fining owners for certain violations, especially in the area of overcharging customers.   According to Theresa Brady, director of the Consumer Finance Division, approximately $50,000 in fines have already been collected and about $40,000 has been refunded to customers who were overcharged.
  The industry has grown so fast in response to regulation, the low amount of net worth needed to open a business -- $20,000, and in response to changes in the financial market.  Since most financing companies or banks require a minimum loan of $500 to be paid off over a certain period of time, people were unable to obtain small amounts of cash and pay it back quickly - check cashing businesses offer that opportunity.
  But the customer must be aware that these businesses are not called "lenders of the last resort" for nothing.  According to the Department of Banking and Consumer Finance, the 18 percent fee charged to a hold a check is equal to an annualized interest rate of over 572 percent on a two-week transaction - yes, over 572 percent.
  Responsible business owners such as Robinson caution against customer abuse of these services.
  "This service is designed for emergency use, not as a convenience or a habitual practice," said Robinson.  "At our business, we discourage that kind of use of these services." Back