License Requirement

• Most states require check cashing establishments to obtain a state license before opening for business. Licensees may have to provide proof of financial responsibility as well as pay an application fee. Depending on state law, the licensee may have to put up a bond to guarantee its services before getting a license and may have to renew the license as often as once a year.
  
  

Fee Caps

• Each state regulates how much check-cashing places may charge as a fee for cashing a check. These regulations protect consumers from losing an unreasonable amount of their money to fees if they choose to cash a check at a check-cashing establishment rather than at a bank. Usually, fee caps require check-cashing stores to charge no more than a certain percentage of the check's value; stores may charge more for charging a large check than a small check.
  
  

Record Keeping Requirements

• Check-cashing places must keep records of their transactions. Specifically, they must keep a log that includes the payee name, check number and account number on each check, how much of the check the customer received and what fees the check-cashing store charged for cashing the check. These records prove that the check-cashing store complied with all applicable laws as well as list the store's revenue, which it needs for tax filing purposes.
  
  

Loans

• Most check-cashing places are not authorized to make short-term loans. If payday loans or other short-term loans are legal in the state in which a check-cashing store operates, the business must get a separate license for making payday loans and may have to pay an additional bond. However, both check-cashing places and payday loan stores must post their licenses and their fee policies in a conspicuous location so that customers can see them.