The Beginners Guide to Operating a Check Cashing Business


Operating a check cashing business is an excellent way to make a difference in the lives of those who live in your community. Your duty is to provide them with a convenient way to get cash in addition to other services that might improve the quality of their lives.

As a check cashing business, you do just that: cash checks. The type of checks you cash is up to you, but the most common checks include government, business, payroll, money orders,  and  personal checks. You can also cash out of state checks.

Check Types and Definitions

Government -all checks issued by the government, including all federal and state government workers’ checks as well as social security, disability, warfare, and military checks. Government checks are the least risky to cash.

Business these checks are bank notes written against business accounts. Checks are written to vendors and suppliers.  Payments are based on the monies originating from assets and then deposited into the bank’s account on a regular basis.

Payroll -all checks distributed to employees who work for non-governmental organization and companies.

Money orders– an order of payment for a specific amount of money.   A money order can be purchased for as much as a $1000 and given to a business or person. As with checks, it can be cashed for a small transaction fee.

Personal -all checks made out to an  (usually hand- written)  individual from another individual who has a non-business banking account.  Cashing personal checks is highly risky. Therefore, a larger transaction fee is charged.

Out of state .-out of state, checks must be verified and may be billed a higher interest by some check cashing businesses.  Usually, the company or person issuing the check is contacted and the identity confirmed by your business.

Paul Lowry

Your First Customer

You have had your grand opening and have marketed your new check cashing business to the community and online.  Your first customer walks into the store and tells you he or she wants to cash a check.  You are one of three clerks.  What are you going to do next?

Of course, you are going to greet the customer to make him feel welcomed. Your goal is to provide each customer with a wonderful experience.

Your customer is standing before you due to several limitations. Some of which includes no checking account, inability to get to the bank or an unwillingness to wait until a deposited check clears. You are happy to help resolve this problem.

Protocol for Check Cashing

Confirm that you have collected all of your customer’s information and identity. You not only do this for new customers but also for regular and familiar customers as well. Don’t assume that you know the financial state of the customer.  A customer’s economic circumstances can change overnight.

For new customers, you will have to confirm their place of employment, or contact the person who ensured the check to the customer. For personal checks, this activity is major.  The individual should also be aware of the higher transaction costs for cashing personal checks.

If all goes well with the verification process, have the customer to endorse the check. Give the cash to the customer minus the transaction fee.  Prepare the check for bank depositing.

Thank your customer for their business and invite them to come back. Also, let your customers know about other services that you offer, including bill payment, payday or car loans. Your goal as a check cashing business is to provide convenience and access to services that banks don’t ordinarily or easily provide.

Warning: Bad Checks

Bad checks come with the territory of the check cashing business. Therefore, your business must have strict penalties for returned and fraudulent checks.

The checks of many clients will be returned due to insufficient funds, closed accounts or other non-fraudulent reasons. However, some checks will be returned due to criminal activity such as fraud or forgery.

How to Respond

Contact the client if possible to see if you can redeposit the check. Otherwise, you may turn to a collection agency or take legal action. But taking legal action can be long and expensive, especially if the client has become unreachable.

Nevertheless, the client’s credit rating will suffer greatly.

However, if returned checks are a result of fraud, you company must report this to the proper authorities to prevent these types of checks from being circulated.

Being on the lookout for bad checks demands that you are away from your customer’s background or financial state at all times.

The best check cashing companies require their customers to take a personal photo for the sake of visual identification.   Photos can be distributed to the public for identification in case the client turns out to be on the dark side.

Operating a check cashing business can be fun and exciting when you see that you have made a big difference in the lives of those in your community.  They trust that you company will be available for them when they need cash their checks and receive their hard-earned money right away.