U.S. Check Cashing, Money Transfer, Payday Loan Services and Pawnshops: A Market Analysis
June 2008
Table of Contents
Page
Introduction: Study Scope, Sources, Methodology 1-6
Executive Overview of Major Findings ($350) 7-23
- Definition of the components of the U.S. market serving consumers outside of the traditional financial services market (the “unbanked”). Alternative financial services: Check Cashing Stores, Money Transfer Services, Pawnshops, Payday Advance lenders. Definition of each segment, number of outlets, and reasons for growth, dollar mkt. size 1999-2007, 2008 & 2013 forecasts, major competitors.
- Major market trends affecting each of four sectors.
- Discussion of reasons for growth of non-bank services, population living below poverty level.
- Discussion of family debt levels.
- Discussion of non-commercial bankruptcy trends.
- Discussion of annual U.S. immigration
Tables:
– U.S. Population Living Below the Poverty Level (1990-2004)
– Reasons Why Unbanked Families Do Not Have Checking Accounts (1995-2004)
– Debt Service Payments to Family Income (1995-2004)
– U.S. Noncommercial Bankruptcies (1991-2006)
– Annual U.S. Immigration (1992-2007)
– Market potential: 1999-2013 F estimated $ receipts of check cashing outlets, money transfers, pawnshops, payday loan services, total industry.
The U.S. Check Cashing Industry ($395) 24-57
Summary & Nature of the Business: How Check Cashing Companies Operate
Industry definition and size. Number of outlets. Check cashers offer convenience for a price. Typical fees charged. Other services offered: money orders, wire transfers, electronic bill payments, notary signatures, utility bill payments, and lottery tickets
Industry History and Evolution
- Beginnings in the Great Depression.
- Impact of deregulation of the U.S. banking industry.
Customer Demographics (by gender, income, race, etc.)
- Scarborough Research 2006 study.
- Ace Cash Express customer profile.
- FISCA 2006 trade group customer profile
Emerging Industry Trends
- Check cashing fees on the rise, Consumer Federation of America survey
- 2007 Federal Reserve Payments study, data for 2000, 2003, 2006
- The entry of Wal-Mart into the check cashing market – discussion
- More competition from: Pay By Touch, 7-Eleven, Wal-Mart
Industry Regulation
- Federal Regulations, state regulations
- Definition of: The Bank Secrecy Act, Money Laundering Suppression Act, USA Patriot Act, Gramm-Leach-Bliley Act
Table: Check Cashing Fees, by type check
Table: List of state check cashing fee caps
Table: State Banking Departments for States With Check Cashing Fee Maximums
Industry Size, Growth, Forecasts
- Industry sales: 1999 through 2007
- Composition of check cashing revenues by type
- Industry sales and number of projected units for 2008 through 2013
Check Cashing Industry Structure & Profit Margins
- Review of the composite financial statements for check cashing outlets in New York State.
Table: Number and Dollar Value of Payments by Check in the U.S. (2007)
Table: The major check cashing franchises at a glance, number, fees, capital needed
Table: Check volume & fees reported: 1993-2006, New York banking dept.
Table: Composite balance sheet of NYS check cashing outlets (2003-2006)
Table: Composite income statement of NYS check cashing outlets (2003-2006)
Major Competitors
Table: The Major Check Cashing chains (no. of outlets)
In-depth Profiles for… (Headquarters location, services, detailed 2005-2007 financials, mergers, history and company profile)
- Ace Cash Express, Inc.
- Check Into Cash
- Dollar Financial Corporation
The U.S. Money Transfer Services Industry ($350) 58-78
Nature of the Business
The transition from the money order to the electronic wire transfers.
How electronic transfers work.
Industry size.
- Industry is being driven by the rise in global immigration.
Table: U.S. Immigration by Country of Origin (1999-2003)
Industry Trends
- International money transfer market is very fragmented.
- Major players have a small market share.
- Increased price competition is lowering transmission costs to the consumer.
- U.S. banks are developing services for the U.S. – Latin America transmission corridor.
Table: Global Wire Money Transfer Market Share, by type network
Table: The Cost to Send $200 to Latin America as a % of Amount (2000, 2004)
Table: U.S. Bank Money Transfer Products
Regulation of the Industry
- Review of state regulations.
- Review of federal regulations.
Industry Size, Growth, Forecasts
- Industry revenues for 1999 through 2004 – discussion & analysis
- Industry revenue projections for 2005 through 2008
Table: Number of Western Union and Moneygram Agents Worldwide (1999-2004)
Major Competitors
In-Depth Profiles for… (Headquarters location services, detailed 2002-2004 financials).
- Moneygram International
- First Data Corporation
- Vigo Remittance Corporatio
The U.S. Pawnshop Industry ($395) 79-103
Nature of the Business
- Earliest form of consumer lending.
- Highly fragmented industry that is concentrated in the southeast and southwestern portions of the U.S.
- The pawn loan process – discussion.
Emerging Industry Trends
- Pawnshops are entering the payday loan market.
Pawnshop Customer Demographics (by age, race, gender, income, etc.)
- Review of the Georgetown study – major findings
Regulation of the Industry
- Review of state regulations.
- Review of federal regulations.
Table: State Regulations on Pawnshop Interest Rates and Fees
Table: State Pawnbroker Associations – contact and phone.
Industry Size, Growth, Forecasts
- Industry sales and number of units for 1999 through 2004 – discussion
- Industry sales and number of projected units for 2005 through 2008 – analysis
Table: International Gold Prices (1999-2004)
Major Competitors
In-Depth Profiles for… (Headquarters location, services, detailed 2002-2004 financials).
- Cash America International, Inc.
- Cash America International, Inc
- EZCORP, Inc.
- First Cash Financial Services
The Payday Loan Industry ($395) 104-132
Nature of The Business
- Fastest growing segment of the alternative financial services industry
- The standard and bank business models – discussion
- CFSA industry Best Practices. Guidelines.
Table: Comparison of Standard Payday and Bank Payday Loan Models
Emerging Industry Trends
- Check cashing services and pawnshops are entering the payday loan market – analysis
End-User Demographics – Who is the Payday Advance Customer?
(by age, income, amount of loan, gender, reasons for loan, etc.)
- Review of the Georgetown Study – major findings
- Review of the IO Data study – major findings
- Advance America’s customer demographics.
Regulation of the Industry
- Review of federal regulation
- Review of payday loan terms and interest rates
Table: Comparison of Payday Loan Terms and Interest Rates by State
Industry Size, Growth, Forecasts
- Industry sales and number of units for 1999 through 2004 – analysis
- Industry sales and number of projected units for 2005 through 2008
Table: Payday Loan Outlets by State – number.
Payday Loan Industry Financials & Profit Margins
- Review of the Flannery and Samolyk study – major findings.
- Discussion of composite industry financials.
Table: Payday Loan Outlet Composite Income Statement for a Typical Unit.
Table: Payday Lender Loan Portfolio Characteristics
Table: Customer Loan Activity (no. of customers, loans, other metrics)
Major Competitors
In-Depth Profiles for… (Headquarters location, services, detailed 2002-2004 financials).
- Advance America Cash Advance Centers, Inc.
- World Acceptance Corporation
- QC Holdings, Inc.
Reference Directory of Trade Associations & Sources 133-143
- Address, phone, contacts for major trade groups, consultants, list of industry studies and articles, Wall Street analysts/research reports.