U.S. Alternative Financial Services Market
Table of Contents
Introduction: Study Scope, Sources, Methodology 1-5
Executive Overview of Major Findings 6-33
* Definition of the components of the U.S. market serving consumers outside of the
traditional financial services market (the “unbanked”). Alternative financial
services: Check Cashing Stores, Money Transfer Services, Pawn Shops, Payday
Loan Services, Rent-to-Own Stores & Services.
* Demographics of the “unbanked” population, key metrics & characteristics
* Definition of each segment, nature of the business/how it works, number of outlets, major growth drivers, dollar mkt. size 2000-2019, 2020 & 2025 forecasts, major competitors.
* Status report & Structure of the Check Cashing Industry
* Status Report & Structure of the Money transfer Industry
* Status Report & Structure of the Pawn Shops Industry
* Status Report & Structure of the Payday Loans Industry
* Status Report& Structure of the Rent-To-Own Industry
* 2020 outlooks for each industry, effects of Covid-19 pandemic on sales & operations
* 2025 forecast for each industry
* Highlights of each report chapter.
Tables:
- Total Size of the U.S. Alternative Financial Services Industry, by 5 Sub-industries (2000-2025 Historical Revenues & Forecast)
Customer Demographics: The Unbanked Population 34-42
-Discussion of the unbanked population, Findings of 2016 survey: FDIC National
Survey of Unbanked and Underbanked Households”
- percent and no. of unbanked and underbanked U.S. households
- Reasons unbanked households don’t have a bank account
- Perceptions of banks’ interest
- Percent using alternative financial services
- Banking status for select demographic groups
- Use of pre-paid debit cards, alternative financial services used most often
- Bank and nonbank credit
- Banking status by geography
- Usage of international remittances
- Study conclusions
Tables:
- Percentage of Households That Are Unbanked, By State: 2015
- Households Usage of Specific Alternative Financial Services: 2015, 2011
The U.S. Check Cashing Industry 43-79
Summary & Nature of the Business: How Check Cashing Companies Operate
* Industry definition and size. Number of outlets. Check cashers offer convenience for a
price. Typical fees charged.
* Other services offered: money orders, wire transfers, electronic bill payments, notary
signatures, utility bill payments, tax preparation, gold buying, payday loans.
Industry History and Evolution
* Beginnings in the Great Depression.
* Impact of deregulation of the U.S. banking industry.
Customer Demographics (by gender, income, race, etc.)
* Scarborough Research study.
* Ace Cash Express customer profile.
* FISCA trade group customer profile
Emerging Industry Trends
* Check cashing fees on the rise, Consumer Federation of America survey
* Industry consolidation
* Increased competition
* The 2019 Federal Reserve Payments Study: key findings
* The entry of Walmart into the check cashing market - discussion
* More competition from: Pay By Touch, 7-Eleven, Walmart
Tables:
- Number and Dollar Value of Payments by Check in the U.S. – 2003-2019
- Number/value/avg. value of commercial checks processed: 1989-2019
- Number/value/avg. value of government checks processed: 1989-2019
- Number/value/avg. value of postal money orders processed: 1989-2019
Industry Regulation
* Federal Regulations, state regulations
* Definition of: The Bank Secrecy Act, Money Laundering Suppression Act, USA Patriot
Act, Gramm-Leach-Bliley Act
Table: Check Cashing Fees, by type check
Table: State Banking Departments for States With Check Cashing Fee Maximums,
address & phone.
Industry Size, Growth, Forecasts
* Discussion of avg. annual receipts per store: for Illinois stores, ACE Cash Express,
AMSCOT, DFC Global
* Number of outlets declining – discussion, number operating in 2007 vs. today
* Composition of check cashing revenues by type (check cashing, money orders, $
transfers, debit cards, bill payments, gold buying, tax preparation, pawn services,
etc. % of total revenues)
* Factors affecting growth
* 2018-2019 industry performance
* 2020 Forecast, effects of the pandemic
* 2025 long-term outlook and forecast
* Federal Reserve findings of non-cash payment trends: checks vs. debit cards
Table: Industry revenues, annual % change: 2000 through 2019, 2020 & 20125 F.
Check Cashing Industry Structure & Profit Margins
* Review of the composite financial statements for check cashing outlets in New York
State and Illinois.
Competitor Profiles (headquarters location, services, 3-5 year financials when available, 2020 1st half results, mergers, history and company profile)
• Ace Cash Express, Inc. (Purpose Financial)
• Check Into Cash
• Dollar Financial Corporation (Money Mart Financial Services)
• AMSCOT Financial
The U.S. Money Transfer Services Industry 80-123
Nature of the Business
* The transition from the money order to electronic wire transfers,
how electronic transfers work.
* Market drivers: analysis of global migration trends, U.S. population vs. foreign born,
illegal immigrants
* Discussion of remittance inflows/outflows, factors affecting, work visas
* Industry trends: increased regulation
* The competition: global & regional providers, banks, informal networks, alternative channels
Regulation of the Industry
* Review of state & federal regulations.
* Definition of: The Bank Secrecy Act, Money Laundering Suppression Act, USA Patriot
Act, Gramm-Leach-Bliley Act
Industry Trends
* International money transfer market is very fragmented.
* Major players have a small market share. Number of Western Union & Moneygram
agents worldwide, role of Wal-Mart, mobile finance
* New technologies present new competition, discussion of 3 transfer models used,
mobile finance
* U.S. banks are developing services for the U.S. - Latin America transmission corridor.
Tables:
- Global migrant stock, by regions: 2005, 2012, 2019
- Origins of the U.S. immigrant population, % born in ea. Nation: 1960–2016
- Top 10 sending countries in the recent years
- Total U.S. Population, Foreign Born Population & Illegal Immigrants: 2001-2017
- U.S. immigration, by country of origin: 2001-2018
- International Migrants: 1970-2019
- Illegal Alien Population, by Country of Birth: 2015 and 2010
- Top Countries Receiving/Sending Remittances: 2010, 2015, 2018
- Global remittance inflows, developed/developing nations: 2001-2020F
- U.S. and Global Remittance Outflows: 2001-2020F
- Destination of outflows from the U.S. – World Bank, other data
- Estimated Remittances from the United States, by Country: 2010-2018
- Number of Western Union and Moneygram Agents Worldwide (2002-2019)
- U.S. Bank money transfer products
Industry Size, Growth, Forecasts
* Industry revenues for 1999 through 2019 - discussion & analysis
* 2019 industry performance: discussion, Marketdata estimates
* 2020 Forecast: effects of the pandemic, Western Union, Moneygram, Euronet outlooks,
Marketdata forecast
* 2025 Forecast: discussion & analysis, Marketdata forecast.
Tables:
- Size of U.S. money transfer industry, revenues 1999-2019, 2020 & 2025 forecasts
- Size of U.S. money transfer industry, by company (Western Union, Moneygram,
Euronet, U.S. Post Office) 1999-2019
Competitor Profiles (headquarters location, services, company history, recent developments, 3-5 year financials when available, 2020 1st half results).
• Western Union
• Moneygram International
• Euronet Worldwide (Ria Financial Services)
•
The U.S. Pawn Shops Industry 124-160
Nature of the Business
* Description of pawn shop services, number of shops, U.S. and Latin American
operations, business model
* Industry status report 2019-2020, industry revenues estimates
* Findings of 2018 National Pawnbrokers Assn. survey: pawn loans vs. merchandise
sales, online sales, outlook for 2019
* Industry structure, no. of stores, regional concentration, largest competitors/chains
* Description of pawn loans and their fees, layaway, title loans, tax refund loans, prepaid
debit cards, gold buying, check cashing
Industry Trends
* Declining number of pawn shops
* Discussion of anti-payday loan legislation, relation to the pawn shops business
* The gold factor: how pawn shops have benefitted from rising price of gold
Tables:
- No. of U.S. pawn shops: 1990-2020 Forecast
- Historical prices of gold: 1999-2020
Industry Size, Growth, Forecasts
* Availability of data on industry size/revenues, sources
* Avg. annual revenues per pawn shop, by EZ Corp, First Cash – for U.S. vs. Latin
American pawn shops
* Historical Industry revenues for 2005-2025 F
* Analysis of current & historical revenues of EZ Corp & First Cash
* Analysis of industry performance during the Great Recession of 2008: findings of NPA
trade association and state associations
* 2019 industry performance and Marketdata growth estimate
* 2020 Forecast, effects of the pandemic on operations and revenues, Marketdata
growth estimate, 1st half 2020 sales of top competitors.
* 2025 Marketdata Forecast, discussion of growth drivers, major factors
Tables:
- Estimated Industry Revenues, no. of shops, avg. per shop: 20025-2025 F
-
Competitor Profiles (headquarters location, services, company history, recent developments, 3-5 year financials when available, 2019 results, 2020 1st half results).
• First Cash (Incl. Cash America, prior to acquisition)
• EZCorp.
Table:
- The Major Pawn shop Chains: no. of stores (U.S., Latin America), revenues: 2019
-
The U.S. Payday Loans Industry 161-188
Nature of the Business
* Description of payday loans, how they work, government actions against the industry
* How big banks have supported the industry since 2009, lobbying efforts
* Basic facts and metrics about the industry (avg. loan size, APR, users, etc.)
Industry Trends
* Growth on online installment loans as an alternative to payday loans (emergence of
Enova, Elevate, Earnin, other apps and firms)
Industry Size, Growth, Forecasts
* Number of outlets, peak levels, relation to check cashers
* Historical view since 1990s, estimate of no. of outlets by Stephens brokerage firm
* Industry revenues for 1995 through 2025 F - discussion & analysis
* 2016-2018 industry performance findings of Center for Financial Services Innovation
study, $ estimates for 2016, 2018
* 2019 industry performance: Marketdata estimate
* 2020 Forecast, effects of the pandemic on operations and revenues, payday loan
application grows, digital lending apps soar in usage, Trump administration reverses
rule, Marketdata estimate of industry size/growth
* 2025 Forecast: discussion & rationale, Marketdata estimate of industry size/growth
Tables:
- Size of U.S. payday loans industry, revenues 1995-2019, 2020 & 2025 forecasts
Operations
* Profitability of payday lenders, CFPB actions
Legislation, Industry Regulation
* No. of states with anti-payday loan legislation
New Lending Apps
* Discussion of Earnin and Enova products
* User demographics
Competitor Profiles (headquarters location, services, company history, recent developments, 3-5 year financials when available, 2020 1st half results).
Tables:
- Major Payday Loan Companies in 2019 (no. of stores, revenues)
- Major Payday Loan Companies in 2009
-
• Purpose Financial (Advance America, ACE Cash Express)
• Check ‘N Go
• Check Into Cash
• Dollar Financial
• QC Holdings
• Earnin (online, app)
• Curo Group Holdings (online, app)
• Enova Intl. (online, app)
•
The U.S. Rent-To-Own Industry 189-205
Nature of the Business
* Description and evolution of the business, how transactions work, estimate of
industry size by APRO trade group
* Avg. store revenues, seasonal sales patterns
Regulation of the Industry
* Review of state & federal regulations, state lease purchase laws
* No. of states with rental purchase statutes
* Typical prices for merchandise vs. outright purchase
Customer Demographics
* Share of population in the “sub-prime” category, findings of Fair Isaac Corp. and APRO
studies
Industry Trends
* Increased competition
* Emergence of virtual and kiosk-based operations
Industry Size, Growth, Forecasts
* Opinions of APRO management regarding leaders’ market share
* Relation between the industry and recessions, and interest rates - discussion &
analysis
* 2019 industry performance: Marketdata estimate, why some estimates of $ size
of the industry are not accurate
* 2020 Forecast, effects of the pandemic on operations and revenues, RAC and Aaron’s
projections of 2020 sales & outlook based on 1st half of year, Marketdata estimate of
industry size/growth
* 2025 Forecast: discussion & rationale, trends over next 5 yrs., Marketdata forecast of
industry size/growth rate.
Tables:
- Size of U.S. rent-to-own stores industry: 1999-2019, 2020 & 2025 forecasts
- Number of Global Rent-To-Own Stores: 2001-2015
- Comparison of Industry Growth & Federal Funds Interest Rates: 1999-2020
-
Competitor Profiles (headquarters location, services, company history, recent developments, 3-5 year financials when available, 2020 1st half results).
• Rent A Center
• Aaron’s Inc.
Reference Directory of Trade Associations & Sources 206-211
* Address, phone, contacts for major trade groups, consultants, list of industry studies and articles, Wall Street analysts/research reports.
