Is it a Bank, or a Check Cashing Center?
People who do not have a banking relationship are refered to as "The Great Unbanked." This group is principally comprised of the elderly and indigent, which represent a large portion of the recipients of payments the federal government is seeking to turn into electronic transactions over the next two years. Of the unbanked U.S. population who receive government payments, 3.2 million receive Supplemental Security Income (a program for the low income, elderly, and disabled), 4.5 million receive Social Security payments, and most of the rest receive veteran's and railroad retirement benefits.
For the last few years The Green Sheet has been predicting a significant decline in the percentage of the population without a checking account. This decline would be the result of the presidential mandate to eliminate federal government check writing by the beginning of 1999, and from an expected action by congress, to create low-cost checking at banks, into which electronic payments by the government could flow. This elimination of checks at the federal level will likely result in creating more "consumer" checks in the marketplace as a portion of "The Great Unbanked" will begin having their government payments electronically deposited into newly acquired checking accounts.
The impetus to bring low-cost checking to the unbanked may now come from check cashing businesses, which have been replacing many banks in urban centers throughout the U.S. Unbanked consumers usually use check cashing outlets as banks, thus blurring the already fuzzy line between check cashing outlets and financial institutions. (See GS 97:07:01, "Who Needs a Bank Anyway?") In addition to Personal Teller Machines placed in check cashing outlets, now, through NIX Check Cashing, "The Great Unbanked" will have the opportunity to be actual account holders, thus continuing the increase in U.S. check writers. Broadway Federal Bank is planning to open a satellite banking center in the lobby of a Nix Check Cashing location in South Central Los Angeles. The center will specialize in low-cost checking and have staff for opening checking accounts and processing loan applications. ATM machines and night depositories will also be available.
Since 1989 the number of consumers who do not have a checking account has been on the decline. In 1995 the percentage of consumers without a checking account was 15.1%, down from 18.9% in 1989. Among these families, 85% had incomes of less than $25,000.
