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The Almighty Buck Technology

T-Mobile Jumping Into the Check-Cashing Industry 211

Posted by Soulskill
from the all-about-the-benjamins dept.
An anonymous reader writes "T-Mobile has made headlines recently for trying to change the cellphone industry's reliance on contracts that lock customers into a particular carrier. Perhaps surprisingly, they've been fairly successful. Now, they're jumping into another industry plagued by high, customer-unfriendly fees: check cashing. 'Specifically, T-Mobile is hoping to offer an alternative for the 70 million or so U.S. adults that either have no bank account or have some bank services but still rely somewhat on check-cashing or payday-loan services.' How will they do it? 'Through the combination of a smartphone and a prepaid Visa debit card, T-Mobile (and its banking partner, Bancor) aims to offer many of the services typically offered through a bank, including check cashing, direct deposit and bill pay. The service, dubbed Mobile Money, allows customers to purchase and reload the card at more than 3,000 T-Mobile stores and, eventually, at Safeway and other retail stores. They can use the card anywhere Visa is accepted, and can also withdraw money, without a fee, at 42,000 ATMs across the country. Mobile Money customers can enroll in direct deposit for payroll, and personal checks and other types of checks can also be deposited by taking a picture of the check using the smartphone's camera.'"
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T-Mobile Jumping Into the Check-Cashing Industry

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  • Why do these exist (Score:2, Interesting)

    by binarylarry (1338699)

    In the US, most banks have free checking accounts. Why don't these people just use a bank?

    • Some people have done soo many bad things that they can't get a pay for banking account.

      The alternative to that is they don't want their money laying about where certain govt. agencies can remove it and deposit it elsewhere, such as the ex-wife's bank account.
      • by amiga3D (567632)

        This isn't the answer to that. You can bet it will be a simple matter for them to grab money from this system as well. Cash is still the best bet if you're shady. Until they do away with cash then it'll be a barter system.

    • by jeauxkewl (1465425) on Wednesday January 22, 2014 @09:20AM (#46034637)
      Most banks have gotten to the point that they only offer free checking if you use direct deposit. If you deal mostly in cash or work for a small company that cuts paper payroll checks, you're not left with a lot of free options.
    • by LF11 (18760) on Wednesday January 22, 2014 @09:39AM (#46034749) Homepage

      There are a huge humber of people in the US who are simply unable to get a bank account. As far as the banking system is concerned, they do not exist. Ever see the movie, Elysium? It's like that.

      It is tough to see when one is a privileged rich kid. I only learned about it when I picked up an interest in bitcoin and heard someone speak about what it meant for the poor to be able to hold wealth without a bank account and without having to carry cash.

      • by Aighearach (97333)

        There are a huge humber of people in the US who are simply unable to get a bank account.

        My dad kept the same bank for 10 years after he lost his ID, because the tellers and the bank manager recognized him. When they closed the branch he went months without being able to get to his SS, because he didn't ask anybody for help. From his perspective he was being held down by The Man, and didn't think of that as being very notable, and it wasn't what he wanted to spend his time talking about.

        I'd be surprised if this sort of situation doesn't cover over 1 million of those ~70 million bank-less Americ

    • Re: (Score:3, Interesting)

      by Anonymous Coward

      Check cashing is there for undocumented people (who can't provide the basic information to get an account, but are occasionally paid by check). I actually used to work for a bank (one of the larger US ones) that owned a Check Cashing business and they used to send someone out to the day laborer sites on paydays to facilitate the process.

      It's about as predatory of a practice as you can get and even the company that owned these check cashing locations knew that it was scuzzy. I remember getting a vibe when

      • Re: (Score:2, Troll)

        by Quila (201335)

        Check cashing is there for undocumented people (who can't provide the basic information to get an account, but are occasionally paid by check).

        Strange concept, people who are in a country illegally, having broken that country's laws, have difficulties doing business in that country.

        My sympathy factor is about zero.

        • Re: (Score:2, Flamebait)

          by Uberbah (647458)

          My sympathy factor is about zero.

          Probably because you're the descendent of invaders pretending that the descendents of native inhabitants are the problem, and/or supported policies that have trashed the governments and economies of said natives.

          • by Quila (201335)

            BS cop out. Pretty much every country at some point in its history had invasion or colonization providing a portion of the modern inhabitants.

            Of course, I'm also a descendant of the "invadees" so I have every right. However, when I did work in a foreign country, I had enough respect for them to apply for a work visa. When I brought foreign citizen family back, I also complied with the laws. I have an exemption from your BS and double grounds to complain about illegals.

        • AC said undocumented, not illegal immigrant.

          Have you ever tried to bootstrap yourself into having documentation without starting with any documentation?

          • by Quila (201335)

            "Undocumented" is just a modern euphemism for "illegal." If you are here legally, then you have documentation because you applied for it and received it before entering the country. If you don't have it on you because you lost it, you can request new documentation from the government. There is no bootstrapping necessary.

            If you are illegal, you are not supposed to be in the country. You have no grounds on which to complain that the country's laws and customs are not friendly to your illegal status.

    • by Grishnakh (216268) on Wednesday January 22, 2014 @10:12AM (#46034937)

      In the US, most banks have free checking accounts

      Citation needed.

      I haven't seen a free checking account in ages. Some of them can be free, if you meet certain qualifications, but I seriously doubt there's any truly free ones out there any more. At the very least, they usually have a minimum balance requirement; at my bank, it's $100 for their lowest-level checking account. If you drop below that at any point, they sock you with fees. Poor people can't handle an account like that because they won't be able to keep up the minimum balance; at some point, they'll need the money NOW and their balance will drop, and that $8 fee will really hurt them. That's why they're called "poor": they can't afford an $8 service fee every month because some multibillion dollar bank wants fees on top of the interest they get for holding peoples' money.

      It wasn't always like this. Back in the 80s (a much better time than now, in most respects), bank accounts were usually free, had good interest rates, and there were no fees for almost anything. Even though ATMs were brand-new technology, they were really reliable (no BSODs then), AND you could use other banks' ATMs, without a fee!

      • by xorsyst (1279232)

        Still like that in the UK, apart from the interest rates. In fact it's got better here since the 80s. But you do need solid ID to get a bank account for some reason.

      • Most community banks and credit unions have true free checking accounts.

        http://www.nerdwallet.com/blog... [nerdwallet.com]

        Commercial banks, not so much.

        The problem is at least as much with bank location as it is the availability of free checking.

        To paraphrase Willie Sutton, banks go where the money is.

      • I never had a "free" account, but I remember when we had good interest rates. My first CD, in the mid to late 80s, paid 8%, and IIRC, my regular savings was 2-3%. Even my checking gave me 1%. Nowdays, most long-term CDs aren't even 1%. :(

        • Through the ups and downs of economic cycles. Then around 1980 personal CDs and money market accounts came along with much higher interest rates, typically related tot he Fed short-term rate. Then most banks switched to these rates, which have been about zero for the past six years.

          The first CDs and money markets had high minimum balances, about $50K in 2010 inflated money. It took me years to save up enough for my first in the 1980s. Plus they had large early cash-in penalties- typically a half-year
      • by torkus (1133985)

        Check out some credit unions. I think mine required a $5 buy-in/minimum deposit or something silly like that. The only fee I've ever paid (10+ years) was for my mortgage application. The catch is they don't have 3 branches in every single town throughout the US...which doesn't matter if you're poor and don't travel or rarely need a teller (like me).

        The banking industry of the 80's was a mess. The prime rate hit the highest ever of 21.5% and averaged around 15% for the decade (currently 3.25% for referen

        • by Grishnakh (216268)

          Unless things have changed, most credit unions have membership requirements, such as being an employee of some big company they're affiliated with.

          I declined and walked out a few years back when I realized what they were asking of me and asking me to sign

          Can you elaborate?

      • by hendrips (2722525)

        Checking accounts are not cheap for a bank to run. I know something about this because I am a member of a credit union, and, being a finance nerd, looked through their books. It is pretty likely that even at $8 per month in fees, a bank would actually be subsidizing a depositor if they didn't also have an account besides checking. The reason that banks were willing to offer large subsidies for checking, ATM use, etc. in the 80's was because it was easier to create lock-in. If you had a checking account

      • had good interest rates

        This is because historic interest rates were insane at the time -- the highest they've ever been [yahoo.com]. When you bought a house, your mortgage rate was about the same as the one you have when you run a balance on a credit card today. Can you imagine buying a house with your credit card, and running that balance for decades? That's what it was like -- so be careful what you wish for when pining for the 80s, especially regarding interest rates.

        • by Grishnakh (216268)

          Can you imagine buying a house with your credit card, and running that balance for decades? That's what it was like -- so be careful what you wish for when pining for the 80s, especially regarding interest rates.

          I realize the interest rates were high back then, but house prices also weren't grossly inflated by speculation and a bubble back then the way they are now. Also, the credit card comparison isn't quite fair: yes, the interest rates were high, but mortgage interest has always been simple interest, n

          • Real estate prices inflated by speculation in 2014? Where? Maybe in San Francisco, or Manhattan, or the ultra-wealthy DC suburbs, but not in too many other places. Most markets are still recovering from the implosion and are *barely* beginning to show signs of that recovery despite years of the lowest historical interest rates ever. Borrowing money to buy a house isn't free, but it's as close to it as it's ever been, especially if you have made good financial decisions. One of the reasons the Fed has k
            • by Uberbah (647458)

              Real estate prices inflated by speculation in 2014? Where? Maybe in San Francisco, or Manhattan, or the ultra-wealthy DC suburbs, but not in too many other places.

              Just about everywhere. Because the same entities that crashed the economy in the first place by betting on housing, have taken their taxpayer-funded bailout money and used it to buy up foreclosed properties to flip or rent.

      • by Solandri (704621)

        In the US, most banks have free checking accounts

        Citation needed.

        http://www.depositaccounts.com/blog/2007/12/introduction-high-yield-checking-deals.html [depositaccounts.com]
        http://www.depositaccounts.com/us/checking/reward-checking-accounts.html [depositaccounts.com]

        The best checking accounts are not only free, they actually pay you. Most of these accounts have no fees, no minimums (in fact they have a maximum). The banks/credit unions make money off of them when you use your debit card for purchases. The merchant pays part of the purchase

        • by Grishnakh (216268)

          You've got to be kidding. Poor people don't have employers who do direct deposit, and when they're working 3 jobs, they sure as hell don't have time to do ACH transfers from other accounts, or to do all this research you talk of. You're just another typical right-wing Fox News-watching American who hates poor people.

      • My credit union does free checking, and my bank has a deal where there's no minimum balance, but if you have at least $1,000 in it they'll pay you interest (USAA).

        • by Grishnakh (216268)

          USAA is for military service members only. Some random poor person can't get an account there. They don't even have physical locations; what good is that to some poor person who wants to cash his paycheck?

          Does your credit union let anyone join, or do they have selective membership like most?

    • by LoRdTAW (99712)

      People who are charged with various money related crimes are banned from banking. A coworker I worked with was a drug dealer and was picked up on tax evasion and did 2 years in the can. He can't have a bank account. Another guy I knew through a friend was caught embezzling $35,000 from his place of work. He did not serve time but had to pay it all back using money borrowed from his parents. He also can't have a bank account for at least another 5 or 6 years (something like a 15 year ban).

      I am sure there are

    • Re: (Score:3, Informative)

      by Anonymous Coward

      Since it would seem that most /. folks are unaware, allow me to explain exactly why many folks don't have bank accounts -- it's simply that due to onerous fees, if/once someone makes a mistake, their existing bank piles on miles of crap fees until such time as the account, through little to no direct action of the customer, ends up irreparably into a negative balance; one of my own employees went negative by about $20, and within 3 months, through no further action by him, he was told his account was someth

    • Banks either won't let them or have made it near impossible for some. Those people have been abandoned by the banking industry.

      If you have a negative balance at a bank like Bank of America they PILE on the fees. Instead of one bounce fee they go high to low to get the most number possible. Then they charge for each day negative. If you do not fix it soon you could owe hundreds or even thousands in fees. They then keep this on file and here is the problem... They share it with other banks and REQUIRE i

    • The first thing that comes to mind is illegal immigrants. Some other people on this thread have mentioned criminal records. Then there's welfare. You start to lose benefits if you have too much money in the bank. It's a pathetic amount like $2000. There's no way you can dig yourself out of the welfare trap with $2000 if you lose your $500/mo EBT because of that. So. Cash the check, buy some bling. That's your real savings. The poor who do this are acting as perfectly rational economic actors. If y

    • by Aighearach (97333)

      In the US, most banks have free checking accounts. Why don't these people just use a bank?

      Not anymore. Banks were doing that for a few years because of competition. Now most charge a fee or have a minimum balance (usually $1500)

      Here is a situation I was in when I was younger: the company I worked for closed, and I lost my job. My checking account ended up -$120 at the end of the month. (because I made the mistake of freely using the "free" $400 overdraft protection; which they marketed to me as being credit) Then when I didn't pay them back within 30 days, they closed the account; but since it w

  • Why can't we just use transactional cryptographic 3D QR-code like web-based systems that use the smartphone's camera and screen?

    If the retailer and the customer both have an Internet connection (independent of each other preferred for security), why is NFC necessary?
  • by StatureOfLiberty (1333335) on Wednesday January 22, 2014 @09:22AM (#46034645)
    Clearly T-Mobile will make some additional money by doing this. But bravo! Talk about an industry that preys on the most vulnerable. We have a local check cashing company that goes by the name 'RobCo'. No kidding (I guess the owners name is Rob). You couldn't find a more appropriate name.
    • by Grishnakh (216268)

      That reminds me of an incident that happened in the Phoenix area a few years ago. Some guy was running for local office; his last name was "Robson" (I forget his first name now). Anyway, to help with the campaign, his son went out with other people to post campaign signs around town (in the PHX area, you'll usually see campaign posters on the corners at main boulevard intersections for a few months before an election). He was out one night posting signs, and got robbed. The first comment in the local pa

  • by erroneus (253617) on Wednesday January 22, 2014 @09:29AM (#46034693) Homepage

    Look at the economy. Where is it compared to years prior? Where is it going? The poor are increasing in numbers for a wide variety of reasons. They are *the* growing market. To not find a way to serve them would be ridiculous.

    • Yes. They are an emerging market.

      The sad thing is most companies write paychecks on banks with existing local branches. Many cash checks drawn on their own accounts for free and even the most avaricious of them will comply for a few bucks ($4-$5 US, locally).

    • You are correct, but it only makes business sense if you can mitigate some of the inherent higher financial risk that comes with doing business with poor people. That's why it's a fee-based structure, and that's why the fees are so high -- they have to offset the statistically-higher percentage of poor people who (for whatever reason) don't / can't hold up their end of the bargain -- by trying to cash bad checks etc. Many people blame the banks for this simply because "the banks are evil," but in reality,

  • Lots of precedent for this, look at Bluebird from American Express, for example. Essentially the same services.

  • No surprise, again (Score:5, Interesting)

    by Anonymous Coward on Wednesday January 22, 2014 @09:30AM (#46034699)

    The European banking system (T-Mobile originates in Germany) is highly competitive. Checks basically don't exist anymore. You can still use them, but nobody wants to, because the alternatives are much more comfortable and reliable. I can only imagine that the people at T-Mobile are constantly thinking "WTF? Does nobody realize how unnecessarily complicated and expensive banking is in this country? Why isn't anybody doing something about it? Maybe we should do something about it."

    Checks in the mail. Seriously, folks?

    • by Grishnakh (216268)

      Why should the banks do anything to change? They have an oligopoly, and if they lose money for any reason, they get a no-strings bailout from the federal government.

      The latest news in New York is that governor Cuomo is going to take a homeowners' foreclosure rescue fund and give it to the big banks.

      • by jonwil (467024)

        Does the US not have smaller banks or credit unions anymore?
        Is there some rule or law that forces people into using the services of the giant greedy corporate banks?

        Or have the big banks bought all the little guys out?

    • by martas (1439879)
      Yeah, tell me about it. When my sister, who lives in Sweden, whipped out her chip and pin card system while visiting me, I must have looked like a caveman seeing a ferrari.
    • Zero paper means zero way of stopping manipulation of your personal ones and zeros - most especially by your government that has proven rules mean jack shit if you're on their list. A push of a button, aaaaand you're penniless (thus homeless) with no way of proving you've been fucked by those that control the databases. Mission Accomplished!
  • this would seem to suggest most t-mobile customers are what the industry commonly considers 'un-banked.' Day laborers, undocumented immigrants, and the working poor should they not already be allotted their salary as a credit card are being targeted for financial services through their mobile phone provider.

    its a win for t-mobile who likely consider this a pittance for the ability to ensure a customer makes their payments in a timely manner, but shortsighted in that it is predicated on the notion that cus

    • "T-Mobile already offers a very affordable $50 plan with or without a credit check for their customers, which can genuinely help some low income customers."

      Affordable? 50$ is *a lot* of money when you are poor.

  • For some reason even such big boys do not break into the strangle hold the credit card industry has on US Economy. The tales of misery emanating from them is very long.

    1. They make it so easy to steal identities. A name and a matching social security number is all they ask, extend credit and are willing to eat their financial losses of identity theft. But the people whose identities are stolen have a long and arduous task of cleaning up their credit history. They make so difficult to freeze and lock my cre

    • by Grishnakh (216268)

      1. They make it so easy to steal identities. A name and a matching social security number is all they ask, extend credit and are willing to eat their financial losses of identity theft. But the people whose identities are stolen have a long and arduous task of cleaning up their credit history. They make so difficult to freeze and lock my credit report to prevent identity theft by huge lobbying effort.

      The solution to this should be conceptually simple: a "gang" needs to get together and steal the identities

      • by rsborg (111459)

        1. They make it so easy to steal identities. A name and a matching social security number is all they ask, extend credit and are willing to eat their financial losses of identity theft. But the people whose identities are stolen have a long and arduous task of cleaning up their credit history. They make so difficult to freeze and lock my credit report to prevent identity theft by huge lobbying effort.

        The solution to this should be conceptually simple: a "gang" needs to get together and steal the identities of various rich people, CEOs (especially those in banking), politicians, etc. Give away those identities (name and matching SSN is all that's needed, as you say) on the internet in places where lots of nefarious people will use them.

        Do you still live in the 90's? Nowadays the FBI and local swat team will raid that "gang" as a matter of priority. We live in a plutocracy. Only money is represented. Remember the golden rule: he who has the gold makes the rules.

  • What happens when you decide a different company has better phone service but all your money is locked up in tmobile banking?

  • Mobile banking is pretty common in Africa for the same reasons T-Mobile is highlighting. Low barrier to entry and with a couple of partnerships with existing brick and mortar shops to act as physical banks you have a bank that is easily more accessible than the traditional banks.
    References
    EcoCash Zimbabwe [econet.co.zw]
    M-Pesa - Wikipedia [wikipedia.org]
  • Great service. It sounds suspiciously like a bank account... so their big breakthrough is you get a checking account with no checks?
  • One reason people use check cashing services, even if they have a bank account, is because it can often be easier to get to and utilize a check cashier than to bring a paper check to your local (if one exists) bank. Why resort to a paper paycheck, when direct deposit is offered by most employers? In part because setting up direct deposit is a pain in the ass: fill out a paper form, search around for routing and account numbers. The payroll department then transcribes those numbers into its payroll system
    • by sylvandb (308927)

      setting up direct deposit is a pain in the ass: fill out a paper form, search around for routing and account numbers. The payroll department ...
      Couldn't all of this be taken care of with a single, one-time, QR code, generated on-demand by you (or, actually, by you bank's online or mobile access application) and given directly to HR, who then simply passes it on to the payroll processor?

      If only!

      When setting up new job direct deposit in 2008 and another in 2012 they BOTH insisted not only on a paper form, but on a voided paper check attached to it! Uh, I use a bill pay service, I don't write my own checks. I don't know if it was HR/payroll department requirement or the payroll processor (don't remember who it was for the 2008 company, but currently it is ADP, talk about stuck in the dark ages...).

      I'm just glad that everything else will accept my routing and account numbers without the pap

    • Direct deposit is "a pain in the ass to set up" because of the required accountability and tax compliance. They need a paper trail if someone in the chain tries to pull a scam, up to and including the payroll processor [daggerpress.com]. They also want it doc'd that you set your witholding via a W-4 in case there's ever a discrepancy. It should literally take less than five minutes (if that), even for a new employee -- my business does it a half-dozen times a year or so. It's a common sense regulation that protects the e
  • 1. Eliminate KYC/AML (not going to happen as the ruling elites don't want freedom fighters and other adversaries to utilize the banking system for their cause)
    2. Or, just use bitcoins. (T-mobile is far capable of operating a wallet and exchange service)

  • Its sort of created a an economic revolution in some poor African countries which hand minimal communications and banking before cellphones. Now a small businessman, e.g. farmer or sewing-women, can accumulate the profits of previous labor and use it to finance future endevors without scrouncing for loans. It was also hard to accumulate currency around the family-hut, assuming you had any. Beacuse petty theft and small emergencies consumed it quickly. Cell-banking has spread to Asia and now the Americas.
  • I wish Safeway has thought of this. A grocery store would be a place people without bank accounts would already come on regular basis, and they already have a secure way of handling cash. Either physical or online crime against a company that has no experience handling it is not going to be pretty.

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