The Pennsylvania Credit Union Association has partnered with Certegy of Tampa, Fla., and Filene Institute of Madison, Wis., to provide a check-cashing services program to its member credit unions.
The program is called PayCheck Accept and was first introduced by Certegy in 1999 to the supermarket industry. In that program, consumers with proper identification can cash payroll and government-issued checks upon electronic approval via specially installed counter terminals.
Bob Hinchey, PCUA Executive VP of Fees, said those terminals are now being offered to credit unions for a $1,000 installation fee. In addition, the CU pays 80 basis points for a guarantee of coverage on each check.
The terminal taps into the most comprehensive driver's license and MICR databases to verify authenticity of the person attempting to cash the check. It will reject any that are associated with previously returned or unpaid obligations. It also monitors check-cashing activity to identify potentially high risk or unusual check cashing behavior.
"This came out of our financial literacy project," Hinchey said. "We have been working with Filene on ways to serve the underprivileged."
Sandy Shenk, PCUA state coordinator of shared services, said Filene has a "nice packet" to help participating credit unions market this new service to their members and potential members.
"We like the idea that we can offer through our credit unions a lower-cost check-cashing option," said Mike Wishnow, PCUA senior VP-communications and marketing. "At the same time, the credit unions that participate will have the opportunity to educate those who may not be banked into any financial system."
Two Options
Wishnow said credit unions could choose one of two options within the PayCheck Accept program. They can cash checks only for members or offer it to the general public. The second option, he said, is handled through a different channel that includes involvement by PCUA's shared services CUSO.
Christine Woods, CEO of New Visions Community FCU in Wyomissing, said the check-cashing program was a natural way to expand services to nonmembers. Her CU, with $12.3 million in assets, was the first to use the new program, rolling it out on Nov. 1.
"Providing affordable financial services is what we at new Visions community do every day for our members," she said. "We not only save them money when cashing checks, but educate them on the value of our credit unions and encourage them to join."
Wishnow said Pennsylvania's secretary of banking, charged with regulating the check-cashing industry, was pleased to hear about this low-cost alternative.
"The regulations in Pennsylvania frankly are not the most consumer protective," said Hinchey, explaining that most check cashers charge the legal maximums which CU officials said are too high.
"We think there is room for credit unions to service those folks with lower-cost alternatives and gain members," Hinchey said.
