Kmart, which has been considered a struggling retailer, has announced it will be rolling out check cashing services in its stores around the country.
The service will be focused toward members of the Shop Your Way rewards program. Fees for the check cashing services will vary, ranging from no charge in some states to up to $3 per check in others. Customers using the service can cash government checks of up to $2,000 and payroll checks up to $1,500. Kmart is also stepping out on the ledge, cashing personal checks that are capped at $400, because of the heightened risk of check bouncing.
The check cashing service by the retailer had a test run last October. The company had run the test of putting the money on prepaid debit cards, but customers preferred of turning checks into cash rather than cards. The trial run offered free check cashing if the customers would have the amount of the check loaded onto a Halogen prepaid debit card.
Wal-Mart had already been offering a check cashing service in its stores. Discount retailers rely on the low income shoppers for their purchases. Many of those are unbanked or under banked and need checks cashed before shopping. Offering check cashing services gets that particular group of customers in stores, then cashes the check and hands them the funds to spend while there. By limiting check cashing to loyalty program members, the retailer is increasing the chances of the customers being loyal Kmart shoppers. The retailer is also probably in hopes that it will draw more customers to the chain for purchases because of the check cashing convenience.
According to the Federal Deposit Insurance Corporation (FDIC), more than one in four households (28.3 percent) are either unbanked or under banked, conducting some or all of their financial transactions outside of the mainstream banking system. That means about 8.2 percent, or 10 million people in the U.S., do not have a bank account at all.
According to Kmart, Shop Your Way members account for 65 to 70 percent of all purchases made in Kmart stores. Kmart offers online and in store layaways and both options will be free, the retail chain has announced.
Other Retailers make Announcements
Sears has announced they will be offering a lease to own program for customers who cannot finance large purchases due to credit issues. Wal-Mart also has said it will be offering free Christmas layaways this year.