Any problems with charging a 2% fee to cash checks for non-customers - thought process is we might encourage them to open an account.

I don't think there is a problem with it as long as it is disclosed; however, you may want to check your state regs.

Look to your state's laws. Texas just finished some legal maneuvering where it was prohibited and then overturned. The thought process is the same as yours, get customers and don't fill the lines with non-customers slowing your service delivery to those who pay you to bank there.

The problem is that I pay the guy that mows my yard with a check. He goes to my/your bank to cash it. You charge him a fee. Next time he mows, he bumps up my fee because you charged him.

There is other discussion on this we have had in the past. Some keyword searches will turn them up if you want to dig.

Our bank has been charging such a fee. It really has not increased number of new accounts at all. A lot of bad will is generated over the fee and customer complaints are constant.

In theory this should force some of those noncustomers to deposit these in their own banks. Are the complains coming from customers in a scenario such as I described above?

We charge fees for non-customers that have checks not drawn on us. If a non-customer has a check drawn on us and they have proper ID we may cash without a fee.

We charge noncustomers for cashing checks that are not drawn on our bank (certain exceptions apply). If the check is drawn on our bank, there is no charge.

I'm surprised that you would cash checks for non-customers that aren't drawn on your bank. Isn't that setting up potential for losses?

We always make certain to verify the identity of the person cashing the check and record their drivers license number, SSN, etc. on the back of the check. Treasury checks and certain other checks are not drawn on our bank and we still cash them with proper ID. It is considered to be a way of building up a good community image and possibly obtaining new customers in the future. There is risk involved, but I have found that in banking that seems to always be the case.

Thanks Andy! Our thoughts exactly.

Yes we run into situations like you mentioned. A lot of these non-customers are not able to have or open accounts because of negative chex systems information.

I do highly suggest you look at your state's laws on this issue. Our state just allowed check cashing charges to non-customers coming to the bank the check is drawn on to cash the check.

that is how we fell also.

We charge a flat fee to non-customers cashing checks (a little easier to train and code on our system than a percentage). The only checks we exempt from the fee are state and federal government checks (why charge someone cashing an unemployment check a fee in this economy). We also only cash state, federal government or payroll checks from known employers for noncustomers. No personal checks unless drawn on our bank. If they balk at paying a fee or we feel uncomfortable cashing the check we send them to the local grocery or convenience store who seems willing to accept a bit more risk for less money.

Opinions are mine and mine alone.

What do you think the CRA implications might be if we start charging a fee ($2-$3) for cashing goverment checks for non-customers?

Devil's Advocate:

Unless there is a state mandate, why cash government checks for non-customers at all?

John,
I see your point exactly. But management has asked me a specific question about charging a fee for this service. I'm still somewhat concerned that there might be some possible CRA implications if we start charging such a fee.

You have some risks and you have costs. How would this compare to others in your area? If your cost is less, it is a service and an advantage to them.

CRA doesn't say you have to lose money.