Check-cashing machines thriving

You hardly notice them while leaving the checkout line. They look like a dressed-up ATM or a gift-registry kiosk.

But these blue-and-gray machines are becoming an economic lifeline for those without checking accounts or time to stand in line at a bank.

They cash checks — payroll, Social Security, tax refunds, almost anything except a personal check — for a fee. They also spit out money orders and do double duty as an ATM in some locations. Eventually, they'll be able to perform wire transfers.

Nationally, there are an estimated 1,500 check-cashing machines in stores such as Fry's, Circle K and Wal-Mart, and that number is expected to double over the next few years, said Sam Ditzion, senior research analyst with Boston-based financial-services expert Dove Consulting.

The growth is an offshoot of the immensely popular check-cashing outlets, a staple in strip malls around the country. The overall check-cashing industry has nearly quadrupled in less than 10 years because of convenient hours and locations for users, according to an April 2000 study by Dove for the U.S. Department of Treasury.

"These provide them (users) an attractive option for accessing cash," said Ann Schmitt, a director for Dove.

The target market for the check-cashing machines and outlets is "unbanked" customers, though the services also are pitched to bank customers who want more check-cashing convenience.

InnoVentry, the company that created the kiosks, estimates that there are 60 million American adults cashing checks and making other financial transactions outside of banks.

A 2000 Federal Reserve study estimated 9.5 percent of U.S. families didn't have any type of bank account in 1998. About 28 percent of that group said it's because they don't write enough checks to make it worthwhile, and 18.5 percent said they don't like dealing with banks.

For Antonio Velazquez and Cesar Flores, the automated check-cashing machine is a necessity. "I don't have a bank account," Velazquez said in Spanish. He immigrated to the Phoenix area from Mexico last year and doesn't have the identification required to open a bank account.

He said using the system is easy.

"They ask a lot of questions, but later it's very easy," he said.

His friend Flores, also from Mexico, was using the machine for the first time. He liked the convenience of cashing a check at a Circle K.

He said he planned to use the machine again, even at a minimum cost of $5 per paycheck.

InnoVentry's machines charge 1.75 to 5 percent to cash checks. The fee is based on the risk associated with the type of check. Payroll checks, seen as the least risky, have the lowest fees, while other privately issued checks cost more because the verification process is more complex.

InnoVentry began as a joint venture in 1998 between Wells Fargo and Cash America International.

The company does ask for a Social Security or identification number to help the machine identify you. The machine also will take a digital photograph to prevent identity theft.