Bethex FCU becomes first CU to align with check casher to cross-sell services

BRONX, N.Y. – Some critics may call them strange bedfellows, but a check-cashing alliance between Bethex Federal Credit Union and RiteCheck Stores is the first of its kind in connecting those who don’t have traditional financial services to checking and savings accounts. Bethex and RiteCheck, a Bronx-based check cashing store chain held a ribbon-cutting ceremony on Oct. 25 to celebrate a partnership that would allow the credit union’s 9,000 members to share services between the two partners. The pilot venture allows RiteCheck’s 11 stores here and in Manhattan to accept deposits, make withdrawals and loan payments at no cost to Bethex’s members. Through PayNet, a network of 500 check cashers, members and customers whose employers have a payroll arrangement through RiteCheck, can cash checks for free. Bethex will absorb check-cashing costs for members which range from $4.50 for a check up to $600, $5.50 for checks between $600 and $1000 to 1% for checks over $1,000. Members will use a point-of-banking terminal in the cashers’ store to deposit funds via automated clearinghouse. The outlet’s teller will accept the physical form of deposit but funds already would be added to the credit union account in real time. Withdrawals would work in much the same way as an ATM. “Sometimes, members may not have transportation or time to make it to our branches,” said Joy Cousminer, Bethex’s treasurer and manager. “What better way to have the convenience of being able to cash a check for free and to deposit some of that money into a savings account.” Over the summer, an initial soft launch resulted in changing to another manufacturer of the point-of-banking terminals because the previous one had a software program that wasn’t working properly, Cousminer said. Since then, more than 25 members have used the terminals to make mostly withdrawals and deposits. Elizabeth McCaul, superintendent of the New York State Banking Department, successfully made a test-run deposit at the ceremony. The alliance, almost four years in the making, came about between Cousminer and Joseph Coleman, president of RiteCheck but has been stymied mostly by the state’s banking regulator and general industry perceptions about a credit union linking up with a check-cashing store. “Credit unions are thought of as good guys,” Cousminer explained. “And, that’s what people were worried about – that our `good guy’ reputation would be tarnished if we worked with check cashers. But we had our lawyer research the outcome of this partnership, we sent our findings to NCUA and the state regulator and we were able to knock every argument as it came up.” Indeed, New York is one of few states that have stringent check-cashing regulations. Coleman agreed they’ve “suffered adversities” along the way but in the end, both sides win and even more importantly, people have access to more services they normally would not have. “This effort is motivated, in part, by the realization that our businesses share many of the customers or potential customers,” Coleman said. “Check cashers aren’t depository institutions – we can’t offer savings products or many other traditional banking services. Credit unions on the other hand (sometimes) can’t afford to open the number of branches they need to effectively service their customers.” Bethex joins a number of banks aligning with check cashers. Citibank is using check cashers in New York to issue federal governmental benefits through a partnership with the Financial Services Centers of America, a national trade association of check cashers. Chase Bank, EAB, Sterling, HSBC and Bank of New York have outsourced their payroll customers to check cashers using the PayNet system. In California, Union Bank opened teller locations at Nix Check Cashing locations for its payroll employees. The pilot will be in place for the next six months, and Cousminer has already fielded calls from other local credit unions, governmental agencies and the FDIC expressing interest in the alliance. At the end of the day, Cousminer is hoping those who rely on check-cashing services will consider the idea of joining Bethex, a motivation Coleman is not crying foul over. “We are hoping to bring a few more people into the financial mainstream,” he said. There are various estimates of the number of people not served by conventional institutions, or the `nonbanked’ or `unbanked’ population which are those who don’t have a checking or savings account. The estimates range from 10% to as high as 17% of the U.S. population, according to Federal Reserve data. Roughly 22% of families earning less than $25,000 per year have no bank accounts and more than 80% of families without a checking account have annual incomes under $25,000. – [email protected]