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Cheque cashing

There are two strands to businesses providing this service. The original concept was to provide a facility for consumers who could not cash cheques they received from other people, whether because they did not have a bank account, or were in the red with their existing account.

Cheque cashers buy such a cheque from their payees, and charge a percentage fee of between 2 and 10%.

The more recent development is the provision of deferred personal cheque cashing, sometimes known as payday loans. Here, the consumer presents his or her own cheque to the cheque casher who agrees not to cash it before an agreed date. The cheque casher will provide a loan of around 95% of the value shown on the cheque.

In theory, cheque cashing should not exist, because cheques are all crossed "Account Payee" and therefore should only be payable into the payee's bank account. However, the cheque cashers get round this by providing a guarantee to the banks that they will honour any cheque which gets stopped because of this breach of normal protocol.