Full service FSCs continue to see check cashing fee revenue in a steady decline as the consumer segment slowly migrates to electronic payments. Small dollar lenders have become extremely hampered by negative regulatory and public perception issues, as well as bank services discontinuance as a result of “Operation Choke Point.”
One bright spot in the landscape lies with small businesses.
- There are almost 28 million small businesses in the US
- More than 22 million are self-employed with no additional payroll / employees
- 52% of small businesses are home based
Why not capitalize on the strengths of your organization’s check cashing skills and available capital by repositioning your services to a different market whose reason for using your solutions are slightly different … and much more lucrative.
The opportunity lies in focusing a specific marketing plan to attract small business owners and their key employees to use your retail network as an alternative to traditional business bank accounts. Using the current infrastructure with the addition of some proven strategies, systems and processes, a high volume, profitable customer segment can be tapped for a whole series of product offerings from check cashing to improve liquidity, a reloadable prepaid card for funds management, and possibly even installment credit products.
A truly successful program will incorporate these five areas. We call them the “5 Pillars of Commercial Check Cashing”:
- Marketing – drives leads to your business
- Decisioning – manages the special risks associated with this category
- Customer Relationship Management (CRM) – system for tracking customers and documentation
- Commercial Prepaid GPR Card – with special features for businesses
- Remote Check Cashing – to allow checks to be cashed when not in store
Marketing to Small Businesses Is A Different Game
Unlike consumers, small business operators are not as likely to just walk into your store for your services. They will need to be educated and have their pain points addressed in order to see the value of this service to them. Knowing who this customer is and how they operate differently than a conventional check cashing consumer is critical. From what industries do they come? What is the best way to reach them? Are they seeking a different customer experience than the consumer? And how do you solicit trial, enrollment and loyalty from this unique customer segment? All of these issues must factor into your strategy and should result in effective tactics to address each.
Grafico Marketing Group uses its years of experience in Business-to-Business marketing to provide a lead-generating program that is geared to reach small businesses and stimulate leads back to your retail locations. From access to targeted lists of small businesses to professionally designed sales tools to a disciplined sales process for your front line business development initiatives, the program utilizes the expertise of the industry’s only marketing firm to specialize in the alternative financial services space for over twenty years.
Big Risks, Big Rewards – Decisioning is Unique for Small Businesses
While the reasons for cashing checks payable to a small business may be similar to those of a consumer in the desire for more liquidity and flexibility that is available from a bank, these checks are really very different. Making the decision to cash a particular check is similar in key respects to any other check cashing decision – except that the verification of the ‘non-natural’ payee requires a few extra layers of diligence and documentation.
First, they are made payable to a legal entity rather than to a natural person, so the identity validation necessary to verify the legitimacy of the organization is a new step in the process. Then there is the issue of the person presenting the check. Are they authorized to cash this check, and by whose authority? Are there multiple people from the same organization that are authorized to present checks for cashing? These are all realistic considerations that have to be faced when making a decision about the risk of cashing these types of checks; not to mention that their average size is considerably higher than those typically presented by a consumer as a paycheck or benefits payment. Collecting, managing, and reviewing the requisite documentation is one key to a successful commercial program.
Joe Coleman of RiteCheck, one of the industry’s premier check cashing minds, has built a very successful Commercial Check Cashing business and has developed proven solutions to assist in the risk assessment and underwriting process to help protect your interests in taking on this new business segment. He is now sharing this opportunity as a consultant and has formed The Coleman Group to bring his success to the industry at large through his experience in building this 5 Pillars program.
Customer Relationship Management – More Than Just Transaction Tracking
Most POS systems today used to track financial services transactions are just that; devices to track transactions. Considering that they also hold a great deal of customer information makes them a valuable and necessary tool to effectively manage your business.
But try to pull some valuable information about the customers that are performing certain transaction types in marketing oriented reports, and that is a different matter altogether. The ability to segment heavy users from casual users, reward behavior with a loyalty program, or associate multiple users with a single company becomes substantially more difficult than just tracking transactions and balancing drawers at the end of a shift.
To really perform some meaningful marketing analytics, the data needs to be removed from your active transaction database – you don’t want to be running heavy analytics on your full customer data that will slow down your systems while your stores are trying to access it for live transactions. The ability to track transactions, associate multiple “pre-approved agents” of the entity authorized to cash the checks, manage returned items, manage the requisite documentation, and even consider any type of loyalty or retention programs, is all based on the ability to enhance your POS data with a more comprehensive reporting system than is currently available from most of the consumer-oriented POS solutions on the market. Further, your CRM must be able to manage the additional CTR requirements of checks cashed by an agent on behalf of an entity.
A Prepaid Card Exclusively for Businesses – Part of the Secret Sauce
A common feature of a GPR Prepaid Debit Card is that it can act like a virtual bank account for its user. But the general consumer-oriented cards cannot serve a small business effectively. A prepaid card designed for small businesses needs to be able to …
- Be issued to a legal, non-human entity with an EIN number, not a Social Security number
- Be able to load larger amounts of money than the typical $5,000 – $10,000 maximums
- Be able to have multiple sub-accounts tied to the master account for use by employees
- Have a different fee structure more in tune with the purchase patterns of businesses
While more card issuers are studying this opportunity, some more progressive ones have already introduced such a product. Supporting this program is FirstView with a GPR Prepaid card specially designed for this small business customer segment. The card can be used as is or privately branded to your specific identity or marketing program. This card provides a powerful connection to your relationship with your commercial customers and provides them with a money management tool that makes incremental revenue for you.
Then you can cash checks for your best customers … even when they’re not in your store with Remote Check Cashing!
Remote Check Cashing – it’s the buzz amongst the industry. If using a check cashing center is mostly driven by convenience as much of the research suggests, then this is the ultimate. Small business customers are often highly mobile. While some of your stores may be convenient for them from time to time, imagine their ability to cash a check with you from anywhere and deposit the funds onto your small business prepaid card. Why would they ever want to use another check cashing service if you can offer that convenience?
But it’s awful risky, right? With the casual consumer that occasionally uses your service, it sure is. But then again, this is not your casual consumer customer. You have a “thick file” or a great deal of information on file with this customer and eventually, a great track record and relationship. The small business customer is probably the least risky customer to whom this service should be offered, especially if they have to earn the ability to use it through past performance. It is the ultimate competitive differentiator creating tremendous stickiness to your best commercial customers.
The FirstView Prepaid Card that is part of this program, comes equipped with the ability to accept funds through a mobile check cashing app powered by Cachet Financial Solutions, one of the financial services industry’s leading providers of Remote Check Cashing technology.
By bringing it all together through the implementation and effective management of these 5 Pillars: Marketing, Decisioning, CRM, A Commercial GPR Prepaid Card and Remote Check Cashing we believe this approach provides the critical components for a successful Commercial Check Cashing program.
When was the last time you saw a new product or service that could make such a positive impact on your business … all while using your current skills?