Source: Kansas City Star,
www.kansascity.com/438/story/396996-p2.html,
December 11, 2007: Two large California credit unions recently purchased check-cashing store chains. Neither credit union plans to reduce
prices for check-cashing services, but both will offer new cash-advance
loan programs to compete with payday lenders.
Kinecta Federal Credit Union, Manhattan Beach, Calif., recently
purchased 55 Nix CheckCashing stores with locations throughout Southern California. By
next summer, all of these stores will provide full credit-union services along
with the current menu of check-cashing services.
According to Simone Lagomarsino, Kinecta's president and
chief executive officer, "To some extent,
it's revolutionary. We're going to be a trendsetter here, and
it's a trend that we hope picks up momentum and gets duplicated across
the country."
Pasadena-based Wescom Credit Union recently purchased eight Area Check
Cashing Centers, also in Southern California.
Kinecta and Wescom
will offer new payday loans that place portions of the loan fees in
credit union savings accounts that the borrowers can access after six
months if they meet the terms of the loan agreements. The intent is eventually have the savings replace or eliminate the need for a cash advance.
Wescom and Kinecta are following a model pioneered by California's Union Bank, which bought a 40 percent stake in Nix
check-cashing stores in 2000. Today, Union operates a separate chain of
"Cash & Save" branches that aren't affiliated with Nix and that
offer check-cashing services and basic savings and checking accounts.
KeyBank,
a Cleveland-based bank with branches in 13 states, also is using
check-cashing services to attract low-income consumers who lack bank
accounts.
Under the "KeyBank Plus" initiative, 121 branches
nationwide cash payroll and government checks for non-account holders
at rates below what most check cashers charge. Quoted at a recent banking conference, Mike Griffen, a KeyBank senior vice president, stated that more than $24 million in
checks have been cashed through the program, with bad-check
losses have totaling only $13,000.
