Happy 2024! Unfortunately, the year-in-review for 2023 is not yet ready due to illness and travel. Instead, let’s talk about check cashing. This alternative financial service allows people at the socioeconomic margins to turn checks into cash for a fee. Check cashing is controversial and often criticized, but it serves a purpose for those who rely on it. When depositing a check, there is an extension of credit involved, as there is no absolute certainty that the payer will cover the check. This creates a credit relationship with the bank. Check cashing business models exist to siphon small amounts of money from poor individuals. While some advocates vehemently oppose these businesses, it’s important to understand the internal logic behind their pricing grids. There are various factors that contribute to the fees charged, including credit risk, operational risk, and the costs associated with running the business.
https://www.bitsaboutmoney.com/archive/the-business-of-check-cashing/