Nowadays, most people use banks in managing their money like saving, bills payment, and even loans. Some of us even use cashless transactions by simply swiping our cards. However, there are some businesses that still issue checks with their operations.
Reasons why paper checks are still use
- Some small businesses can’t afford to pay the processing fees for integrating the credit card payment into their system.
- It is the easiest way to pay because people can send it via mail without worrying about other people stealing it and it is close enough to cash payment.
- Using this method, you don’t have to pay for expensive processing fees. For credit cards, it is 2 to 5% for every transaction.
- Paper checks completely document all of your transactions. You can easily check all of your expenses or have physical proof for the bills that you paid.
- People have much more control with their money.
How Cashing Business works?
Since paper checks are still widely used all over the world, it is not surprising that the cashing business is established. This kind of business is simple to run and the service is easy to use. Some individuals who receive checks as payment may go to a cashing business due to several reasons, such as not having a bank account; he/she doesn’t want to wait for the check to be cleared, or he/she needs to get the cash quickly. By using the services of cashing business, the individual only needs to present the check, documents that can verify his/her identity, endorse the check, and pay a processing fee. Once everything is cleared, the client will receive the cash stated in the check.
Starting your own Cashing Business
Like any other business, you are required to get a license and registration. Under the law, cashing business is included in the money service business. Note that you need to specify the services that you will provide. It can be strictly cashing services only or you can have additional services like bills payment, money orders, currency exchange, and selling basic insurance policies. In addition, you have the option of establishing your own cashing business or be a part of a nationwide cashing store.
Running the Business
One important part of running your business is establishing the policies. For a franchise, the main branch will send the current policies used by the business. If you have an independent cashing business, you have to make your own policies including the type of checks that you will only accept. You also need to include the verification process like confirming the identity of the client, calling the company that issued the check, and so forth.
No matter how careful you are, there will be some cases that you will have returned checks. This happens when there is insufficient fund in the account, the account was closed, issuance of a stop payment, or a case of deliberate fraud. You need to make sure that you have the prepared with the necessary procedures and documents to resolve this issue.