The U.S. Check Cashing, Money Transfer, Payday Loan Services and Pawnshops Industry:

The U.S. Check Cashing, Money Transfer, Payday Loan Services and Pawnshops Industry

Product Type: Market Research Report
Published by: Marketdata Enterprises Inc.
Published: June 2008
Product Code: R237-234

Description

This updated analysis by Marketdata examines the controversial but growing “alternative financial services” sector — a $27 billion business comprised of loosely regulated check cashing, payday loan, money transfer and payday loan services. These outlets serve 35% of the U.S. population. Many companies are happy to accept the business of consumers with spotty credit records who have been rejected by banks--the 12 million “unbanked” households that choose not to use traditional banks.

Explosive growth had taken place in the payday loan business, but they have come under heavy scrutiny. Critics say these services gouge consumers with high fees and interest rates, but they do provide more convenient hours, less red tape, easier credit, and most customers don’t seem to complain. There are 13,000 check cashing outlets, 11,000 pawn shops, 25,000 payday loan stores and 467,000+ money transfer agents competing for this business today. Many outlets/services overlap—providing multiple services at the same site. The study explores why growth at check cashers and pawn shops is meager, and the effects of the economic slowdown.

This new study by Marketdata examines the nature of the business, reasons for the growth of non-bank services, immigration trends, national receipts/growth from 1999-2007, 2008 to 2013 forecasts, average store revenues, customer demographics, key industry trends, federal/state industry regulation/fee caps, self-service check cashing machines, profit margins, franchising, gold prices, global remittance trends, consumer debt levels, reasons for the industry’s past negative image, and more. Findings of research studies by: Fannie Mae, Georgetown University, FISCA, Federal Reserve Board, brokerage analysts, Natl. Check Casher’s Assn., The World Bank, INS, Natl. Pawnbroker’s Assn., U.S. Census Bureau, FDIC, and more.

This study is believed to be one of the few in-depth publicly available business analyses that exists of this market. 13 in-depth company profiles (with 2005-2007 financials) are provided for: ACE Cash Express, Check Into Cash, Dollar Financial, Western Union, Moneygram, Ria Financial, Cash America, EZCORP, First Cash Financial, Advance America, Check Into Cash, CNG Financial, and QC Holdings.

Table of Contents

Introduction: Study Scope, Sources, Methodology
Executive Overview of Major Findings: • 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
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
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.
Major Competitors: • Ace Cash Express, Inc.; • Check Into Cash; • Dollar Financial Corporation
The U.S. Money Transfer Services Industry
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.
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.
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
Major Competitors
In-Depth Profiles for… (Headquarters location services, detailed 2002-2004 financials).: • Moneygram International; • First Data Corporation; • Vigo Remittance Corporation
The U.S. Pawnshop Industry
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.
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
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
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.
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; • Industry sales and number of units for 1999 through 2004 - analysis; • Industry sales and number of projected units for 2005 through 2008
Payday Loan Industry Financials & Profit Margins: • Review of the Flannery and Samolyk study - major findings.; • Discussion of composite industry financials.
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: • Address, phone, contacts for major trade groups, consultants, list of industry studies and articles, Wall Street analysts/research reports.

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