The very profitable and simple to set up cheque-cashing business is dying out in the United Kingdom because of the UK Payments Council’s decision to phase out cheques by the year 2018 in an attempt to encourage the development of new and more progressive forms of payment. However, you can still manage to earn some good money before cheques are completely abandoned.
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Research the market. The success of any business depends on your knowledge of the market participants and understanding of consumer behaviour. The cheque-cashing business has a 350-year history in the United Kingdom. Of course there are rules of the game, which you have to be aware of.
Decide whether you want to set up a new company or buy a franchise.
Choose your target audience. Older people are more likely to use cheque-cashing services, both because they are used to cheques and because they may not want to queue in a bank to process them. Another audience that your business can potentially target is people with bad financial credit records and frozen bank accounts.
Register as a money service business. Under the 2007 Money Laundering Regulations, British businesses that cash cheques or perform any other money transactions for their customers have to register with HM Revenue and Customs (HMRC). To register, you have to fill in form MLR100, sign and date it, and then send it to the HMRC by post.
Complete the fit and proper test. The fit and proper test is designed and conducted by HMRC to ensure that inappropriate people are not running money service businesses. Every single person who will be involved in decision making or running daily business operations should be tested. This includes shareholders who own or control 25 or more per cent of the shares. New employees taken on board after initial business registration should take the fit and proper test within a specified period of time after being contracted. To apply for the test, fill in form MLR101, sign and date it, and send it to HMRC.
List premises where business operations will be carried out. HMRC requires cheque-cashing businesses to list all places used to render the service to customers, including offices, call centres and shops. A separate fee is paid for each premises. Addresses of franchisees and agents you have control over should also be listed in your application to HMRC. In cases where you do not have premises, because you work from home or service customers door to door, you have to register one address, either where you reside or receive all official communication.
Tips and warnings
- You may want to consider investing in other money service businesses, such as a Bureau de Change, because cheque-cashing will die pretty soon.
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