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

Share Article

The Check Cashing and Payday Loan Services industry did well during the recession. As consumers struggled during difficult economic times, they used industry services to advance their paychecks or get quick cash back. However, as the economy is expected to recover and consumers start to fatten their wallets, the industry's services will be in less demand. Industry regulations have been increasing and more regulations are expected to continue this trend, hindering revenue growth and profit margins. For these reasons, industry research firm IBISWorld has added a report on the Check Cashing and Payday Loan Services industry to its growing industry report collection.

IBISWorld Market Research

IBISWorld Market Research

Growth experienced during the recession will be hindered by increasing regulations

The collapse of the financial system and subsequent recession have increased demand for Check Cashing and Payday Loan Services. When the United States went into recession, many people were forced out of work and the unemployment rate soared to 10.0% in 2009. With no funds to cover monthly bills such as mortgage payments and car loans, many people were forced to seek out industry services. Additionally, the average length of employment increased significantly, causing the poverty rate to spike. “As a result, industry firms distributed more small-sum, short-term, high-rate loans, thus generating a steady stream of revenue,” said IBISWorld industry analyst Eben Jose. In the five years to 2012, industry revenue is expected to increase at an annualized rate of 2.5% to $10.1 billion, with estimated growth of 2.0% over 2012. Although the recession may have fueled revenue growth over the period, the increase in industry activity also attracted the attention of politicians and commercial banks.

Federal and state governments have increasingly turned their focus to passing legislation that regulates the industry. According to Jose, the majority of states have regulatory requirements that force industry firms to file for a license to operate in addition to adhering to strict laws regarding the principal amount of loans and loan interest rates. Furthermore, the federal government has continually increased their oversight of the industry through pieces of legislation that increase industry transparency. As a result, profit margins have decreased due to higher compliance costs and barriers to entry have increased, bringing domestic industry expansion down from pre-recession levels. In addition to federal regulators, commercial banks have also taken a closer look at the industry's business model. After recognizing the high level of demand, they decided to craft similar loan products, putting even further pressure on industry revenue and profit margins.

In the five years to 2017, pressure from state and federal governments as well as commercial banks will continue to inhibit revenue growth. As a result, IBISWorld forecasts industry revenue to increase at a slower rate than the previous five-year period. Furthermore, these factors will force many firms out of business, resulting in a decrease in the number of industry firms over the next five years. On the other hand, international expansion will provide a bright spot for the industry and will be the primary driver of revenue going forward. The Check Cashing and Payday Loan Services industry exhibits a low degree of market share concentration. Many small firms operating in local or regional markets characterize the industry. Only the largest companies (DFC Global, ACE Cash Express and Cash America, among others) exhibit the ability to operate more than a thousand establishments across domestic and international markets. Low barriers to entry make it relatively easy for new entrants to begin offering check cashing and payday loans, while relatively moderate degrees of competition allow increased potential for new firms to exploit a niche. Market share concentration has been decreasing in line with the addition of more enterprises, with firm numbers expected to increase at an annualized rate of 1.7% during the five years to 2012. For more information, visit IBISWorld’s Check Cashing and Payday Loan Services in the US industry report page.

Follow IBISWorld on Twitter:!/IBISWorld
Friend IBISWorld on Facebook:

IBISWorld industry Report Key Topics

This 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. Examples of industry operators include Check Into Cash and Check 'N Go. 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.

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Gavin Smith
Visit website