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Check Cashing & Payday Loan Services in the US Industry Market Research Report Now Available from IBISWorld

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Growth experienced during the recession will be hindered by increasing regulations.

New York, NY (PRWEB) February 19, 2014

The Check Cashing and Payday Loan Services industry accounts for nearly a quarter of financial services spending by underbanked consumers. Frozen lending markets caused by the recession expanded the underbanked client pool for industry operators, as a growing number of individuals were unable to access traditional financial product offerings. As such, the industry is predominately countercyclical in nature, with rising unemployment and poverty rates benefiting demand levels substantially. Rather than default on debts, poor or recently laid-off consumers chose to turn to the industry’s unsecured loan products during and subsequent to the recession. Consequently, revenue for the Check Cashing and Payday Loan Services industry is expected to increase at an annualized rate of 2.0% from 2009 to 2014 to reach $11.1 billion; this growth includes a 2.2% rise in revenue expected in 2014 alone.

According to The Pew Charitable Trusts, 5.5% of domestic adults have used a payday loan. In general, younger individuals that lack a college degree and generate less than $40,000 in annual income are the most likely to rely on payday loans. The average borrower takes out eight loans of $375 each and pays $520 in interest annually. Moreover, this average borrower is typically indebted for five months out of the year.

According to IBISWorld Industry Analyst Stephen Hoopes, “Given the industry’s reliance on poorer consumers for revenue, regulatory agencies have sought to increase legislation surrounding industry operators, as they view payday loans and check cashing fees as exploitative.” As such, 15 states currently either ban payday loans or cap the annual percentage rate at 36.0%. Furthermore, as national interest rate cap proposals are forecast to intensify, compliance costs are expected to increase, to the detriment of profit margins.

Over the five years to 2019, industry revenue is forecast to increase at a more subdued annualized rate. “Despite rising employment levels, the number of consumers that are structurally unemployed or in poverty is anticipated to remain elevated,” says Hoopes. Moreover, competition from commercial banks that offer similar short-term, high-interest products is expected to fall, given recent decisions by Wells Fargo and US Bank to discontinue these offerings. Yet, external competition is still expected to rise, largely in the form of companies that offer industry products exclusively online. In addition, expected increases in regulation are anticipated to force some industry operators to move geographic locations or close down entirely.

For more information, visit IBISWorld’s Check Cashing and Payday Loan Services industry in the US industry report page.

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IBISWorld industry Report Key Topics

The Check Cashing and Payday Loan Services industry cashes checks, drafts or money orders for the general public. Companies in this industry may also offer payday loans, installment loans and other financial services. Banks and firms that operate exclusively online are excluded.

Industry Performance

Executive Summary

Key External Drivers

Current Performance

Industry Outlook

Industry Life Cycle

Products & Markets

Supply Chain

Products & Services

Major Markets

Globalization & Trade

Business Locations

Competitive Landscape

Market Share Concentration

Key Success Factors

Cost Structure Benchmarks

Barriers to Entry

Major Companies

Operating Conditions

Capital Intensity

Key Statistics

Industry Data

Annual Change

Key Ratios

About IBISWorld Inc.

Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit or call 1-800-330-3772.

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Check Cashing & Payday Loan Services in the US Industry Market Research Report Now Available from IBISWorld

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