Check Cashing, Money Transfer, Payday Loan Services Booming, Catering To The “Unbanked�?By Danielle Mason
Payday Loan Writer
Tampa, Florida — Marketdata Enterprises, Inc., has released a new 104-page report entitled: Check Cashing, Money Transfer, Payday Loan Services & Pawnshops: A Market Analysis. They found 35% of the U.S. population, or 12 million households, is “unbanked.” Marketdata considers the “unbanked” to be anyone without a checking or savings account. These “unbanked” individuals are often in need of cash loans and, as a result, are utilizing alternative financial services such as check cashing outlets, payday loan outlets, money transfer services, and pawnshops.
Why are so many people “Unbanked?”
“Large banks have limited hours and restrictive loan policies. People with bad credit or no credit that need cash quickly due to unexpected car repairs, medical bills and other events prefer using these alternative services. They are not asked about their credit records, and if they have a regular job they can get their payroll, government or personal check cashed, or get a short term loan quickly—for a fee. Most users gladly pay these fees for the more convenient hours and ease of use, but consumer groups and others criticize these services for the steep fees they may charge,” according to Research Director, John LaRosa.
How are the banks responding?
“Mainstream banks and large financial institutions such as Wells Fargo, Banco Popular, and Union Bank of California have been lured to the unbanked market by its high growth rate. They go so far as to reach out to the community via mobile check cashing vans that visit local factories and worksites. Customers of alternative financial services are NOT just the poor. Due to historically high household debt levels, many more middle income consumers find themselves squeezed from payday to payday. They also like these outlets’ longer and weekend hours and less onerous credit policies,” according to Research Director, John LaRosa.