A new research tool from Bank On provides information on the unbanked and underbanked at the community level.

Unbanked Data Includes…

The Research Your Community tool returns data on the number and percentage of households by city and metro area.  It also includes state and national numbers so you can compare your community with state and national averages.

You also get detail on at-risk populations within the defined community.  The data provided includes breakdowns by household income, ethnicity, level of education, age and citizenship.  The app even generates an interactive map, and can export data to a pdf.

Check out this great resource to get a better understanding of the needs in your local community.

Related posts:
Bank On Initiatives for the Unbanked

FinCEN released the latest SAR Activity Review – By the Numbers, with details on SAR filings for January 1, 2010 – December 31, 2010.  The key findings compare reporting in 2010 to previous 12 months of 2009:

• Overall SAR filings increased 3.5%
• Non-depository institutions comprised roughly half of the reports filed (an increase of 12%)
  

  SAR filings by money service businesses on the whole increased 10% in 2010

Finding specific to Money Service Businesses (MSBs):

• SAR filings by MSBs on the whole increased 10% in 2010
  • “Individual using multiple or false identification documents” was the only activity that saw a decrease; dropping 16%

• MSBs reported that money transfer and money orders were the leading type of serviced related to SAR reporting.  Accounting for 96% of services reported.

• Reports on money transfers increased 23% in 2010, compared with 2009.
  • Other financial services declined
    • Money orders reports dropped 3%
    • Traveler’s checks, down 71%

Looks like you should watch out specifically for money transfer transactions, where an individual returns frequently and / or to multiple locations!

For free information on SARs and government compliance contact AllTrust Networks at 1-866-280-1679, or visit us online to learn more.

The Future of International Calling | Pinless Prepaid Minutes

Phone cards as we know them today

Phone cards have been around for what may seem forever.  They’re a great way to make long distance and international calling without having a long distance calling plan.  Most people are familiar with them and have used them.  They’ve certainly evolved over the years, with an endless supply of different programs, providing the “best rate” to your home country! While this sounds great, there are some disadvantages for the average customer with traditional phone cards.  There are hidden fees (ones to connect and disconnect); and rates change frequently, to the extent that customers don’t know how many minutes they’ll actually get for that $5 card.

Retailers that service the immigrant population (those who probably use the cards the most frequently) have the hassle of maintaining card inventory and dealing with prepaid reps on an on-going basis.

The Future | Pinless, Cardless Prepaid

So what if you could have a virtual prepaid phone card – with no pins to remember?  Sounds pretty good doesn’t it.  Krush Communications, who has been marketing prepaid phone cards for over 10 years, is now offering what they call Pinless Prepaid, or Homies No Mas Pin.

Customers simply visit their local retailer where they provide:

The best part of the program – no hidden fees – you actually get to use the minutes you buy for actual conversations.   In addition, customers can benefit from adding additional phone numbers for free to the program (so you can call from home, multiple cell phones or work all using the same minutes), and take advantage of the speed dial feature – dial just 2 digits per call, rather than 10-20 for international numbers.

Homies retailers are currently offering a $1 free promo – so customers can try out the program for free.  And great news for retailers – they don’t have to pre-fund an account; rather they get ACH’d weekly.

While there are a few other pinless prepaid programs out there, this one looks the best bet for consumers.  And for full disclosure, AllTrust is now offering this service.  For more on the Homies No Mas Pin program visit www.alltrustnetworks.com/pinless.

CBC News ran an article on a new study which posits that using a credit card for purchases feels less like real money, so people who use them are more impulsive.

So cash is apparently healthy?

Well if not healthy at least less impulsive when presented with all those yummy things on display at the grocery or the candy bars at check out!  The study analyzed shopping patterns of 1000 people and discovered two things:

1. “There is the correlation between unhealthiness and impulsiveness of food items: unhealthy food items tend to elicit impulsive responses.”

2. “Cash payments are psychologically more painful than card payments, and this pain of payment can curb the impulsive responses to buy unhealthy food.”

The study, published in the Journal of Consumer Research, notes that the purchase of unhealthy food products is influenced by many factors such as faulty beliefs and lack of knowledge.

But researchers suggest impulsivity may be the single most influential factor in an individual’s decision to buy unhealthy foods.

So maybe using check cashing establishments to cash your paychek isn’t so bad after all.  Read more about this study at http://www.cbc.ca/health/story/2010/10/20/con-cash-purchase.html#ixzz12zbsIJ5B

Kind of interesting that the Census Bureau did a study on money transmittal!  Here’s link to the paper http://www.census.gov/population/www/documentation/twps0087/twps0087.html; and I posted a few of the key findings below.

• Of the 5.9 million households that reported sending monetary transfers abroad, 84 percent were foreign born.
• On average, households sent monetary transfers 6 to 7 times during the previous 12 months. Considerable differences exist between the remitting patterns of native and foreign-born households.
• 53 percent sent less than $1,000, including 34 percent that sent less than $500
• Foreign-born households are more likely than native households to remit annual amounts greater than $500 – while 43 percent of native households reported sending more than $500, 71 percent of foreign-born households did so.
• Data from the CPS Migration Supplement suggest that households sent an estimated $11.7 billion to relatives and friends outside the United States during the 12 months before the survey.

The paper also includes some data from other surveys on money transmittal (and numbers vary greatly)…

– U.S. Bureau of Economic Analysis (BEA) is the government agency responsible for publishing the Annual Revision of the U.S. International Accounts (Bai and Hoang, 2010) which includes an estimate of personal transfers of the foreign-born population resident in the United States to households abroad. The BEA defines “personal transfers” as all transfers in cash or in-kind made or received by resident households to or from nonresident households. Using a model-based approach and data from the American Community Survey, the BEA estimated personal transfers by the foreign-born population resident in the United States to households abroad to be $36.9 billion in 2007, $38.5 billion in 2008, and $37.6 billion in 2009

– A second study by the Inter-American Development Bank’s (IDB) Multilateral Investment Fund (MIF) focused on remittances sent by immigrants in the United States to Latin America and the Caribbean. The MIF commissioned Bendixen and Associates, a polling and research firm based in Miami, Florida, to interview 2,511 adult immigrants from Latin America by telephone in Spanish from May 3-25, 2006 (IDB, 2006). Based on these data, IDB estimated that Latin American migrants working in the United States sent $45 billion to their home countries, up from approximately $30 billion estimated by a similar study done in 2004.

What is Velocity in relation to check cashing?

Velocity refers to the number of checks received and the dollar amount of those checks over a given period of time.

• Customer Velocity is related to the volume for a specific customer, regardless of what bank account their checks are drawn upon.
• Maker Velocity refers to the number of checks seen from a particular bank account, regardless of which customers catch them

Why is Velocity Important?

First-time customers are the most common source of fraudulent checks.  Successful check cashers limit their exposure to a new customer until they build up a track record of cleared checks.  Even long-time customers should have their volume monitored for any unusual volumes

On the maker side, criminals often try cashing one fake check at a store.  If it’s accepted, they will flood the store with other people to cash these checks.  By the time the first one is returned, the store has lost several thousand dollars.  When the merchant restricts the number of checks they will take from a new maker, the fraud exposure is much lower.

How to Manage Velocity

You might have some store policies in place, but if your check cashing system doesn’t enforce them for you automatically, it can be difficult for you and your staff to manually manage them; increasing your risk of fraud.

If you are cashing checks here are some velocity settings to consider.

Set limits on Makers:

• Total number of checks for an individual maker that you’ll accept with a period
• Total dollar amount within a period
• When a maker transaction causes a spike in average weekly dollars cashed or per check dollars cashed in a week

Set limits on Customers:

• Number of checks per individual per period
• Cumulative dollar amount per period
• Whether to include the current check when triggering limits

For more fraud prevention and risk management tips, see AllTrust’s Combating Check Fraud white paper or FinCEN’s Money Laundering Prevention Guidelines.

For more about AllTrust check cashing solutions with built-in velocity settings, visit us online or call 1-866-280-1679.

I’ll be speaking at the Hispanic Retail 360 conference, on Monday, August 9, covering “Using Alternative Financial Services to Reach Hispanic Consumers.”

The talk will provide information in the following areas:

1. Overview of the unbanked/underbanked market and why there is a demand for alternative financial services (AFS).
2. An overview of the key AFS, to include how they work and in-store economics.

• Check Cashing
• Money Transfer
• Bill Payment
• Lending
• Prepaid Cards
• Money Orders

3. Unique aspects of AFS for retailers who focus on this market

If you’ll be at the show, come by and let’s talk!

When dealing with biometrics, there are two types of matching to consider, verification and identification.

• Verification – A one-to-one comparison (1:1) of a biometric for a person for whom you wish to verify.
• Identification – A one-to-many comparison (1:N) of a biometric against a biometric database in attempt to identify an unknown individual.

Verification equates to Am I who I claim I am? When you enroll a customer for the first time, you also capture additional information such as name, phone number, or social security number.  When the customer returns, they are identified through one of those pieces of information, then verified through the biometric match.   Verification only proves that the person in front of you now is the one who originally enrolled.

Identification on the other hand, answers the question “Who am I?” .   A customer is enrolled with fingerprint and additional information as noted in verification.  The customer can then be identified from only their fingerprint because the system compares that fingerprint against an entire database (hence the expression one-to-many).   This allows for prevention of enrollments with near-duplicate information or multiple IDs.

These performance criteria can only be met with a high-density fingerprint image and databases optimized to match large quantities.

Which is better?

If you have a single location and know all your customers personally, then you may not need the additional data organization and security that biometric identification provides.

However, if you want to do any of the following, identification may bring benefits to you.

• Match new customers against shared-negative databases
• Prevent duplicate enrollments across multiple locations
• Prevent fraud rings from hitting you multiple times with fake IDs

AllTrust Networks offers biometric identification services for check cashing and other retail applications.

For more information, contact Leslie Connelly at 703-467-8332 x303    or visit

http://www.alltrustnetworks.com or http://www.alltrustnetworks.com/Product/FingerprintDevice/tabid/390/Default.aspx

Related Article: Using Fingerprint Technology in Check Cashing

Fingerprints have been used in check cashing for a long time. From the very basic – using ink to capture the customers fingerprint image on the back of the check; to the advanced – instantly identifying an individual by their fingerprint. But are biometrics necessary?

The Power of Biometrics
Here’s a short list of reasons why you might consider using biometrics in your check cashing business:

1. Speeds Transactions. With fingerprint technology, customers don’t have to provide a driver’s license at each transaction; nor do clerks experience language barrier problems when attempting to identify an individual. The check casher simply places their finger on the fingerprint scanner; and their record immediately appears for the clerk. On busy paydays and Friday’s anything to keep the line moving quickly is a benefit for retailers.
2. Minimizes Management Oversight. By combining the fingerprint with a complete check cashing history, and a few good store policies; clerks can be empowered to make some check cashing decisions; easing management oversight.
3. Easy to Use. Customer’s like the ease of use; as well as the fact that they don’t have to constantly prove who they say they are.
4. Government Compliance. Ensuring you know your customer can ultimately help your banking relationship. Having detail on your store’s customers will ease the bank’s burden to ‘know their customers’; keeping your banking relationship open and positive.
5. Fights Fraud. Biometrics is a great deterrent for many would-be criminals. Some will see the device and immediately walk away. And once enrolled, a person cannot re-enroll. Thus a potential fraudster can’t go to other locations or return to the same store during another shift, with another driver’s license, to cash bad checks. In addition, having fingerprints as part of the check cashing individual’s record gives you some recourse should you need to pursue fund recovery.

For more on biometrics in check cashing, visit AllTrust Networks. And be sure to check out my next post; Biometrics: Identification vs. Verification!

Photo by bcymet

FinCEN (Financial Crimes Enforcement Network) released its latest SAR Activity Review – By the Numbers report last week.  Retailers offering financial services should be alert, as FinCEN says 27% of forms filed in the first six months of 2009 can be attributed to suspected fraud-related activities (check fraud, mortgage loan fraud, consumer loan fraud, wire transfer fraud, commercial loan fraud, credit card fraud and debit card fraud).

Reported SAR Activity 2009

Reported instances of Check Fraud increased 19% in the first six months of 2009, compared to the corresponding six-month reporting period in 2008. Two other check-related suspicious activities not depicted in the table also saw change during this period – SARs listing Counterfeit Check increased 36%, while Check Kiting decreased 13%.

Money Service Business (MSB) filings for SARs increased 7% in first half of 2009 (compared to same period in 2008).  Some things that stand out:

• MSBs characterizing the suspicious activity as “Same individual(s) using multiple locations over a short time period” increased 25%
• Money transfers and money orders continue to be leading types of financial service related to suspicious activity. Reports on money transfers increased 16%, compared to reports filed during the same period in 2008. At the same time, reports on money order activity decreased 12%.

Download the full report from FinCEN.