Is Chase’s Liquid Prepaid Card the Check Cashing Killer?

check cashing storeChase’s stature in the prepaid card game is growing rapidly.  Last year, Chase – the second largest US bank in terms of total assets – didn’t even offer a prepaid card.  By the time our 2012 Prepaid Cards Report was released, the newly launched Liquid Card was already the best card for the underbanked to use as an alternative check cashing tool.  With Monday’s announcement that Chase’s mobile banking applications are now available to Liquid cardholders, it appears that the bank has a true game changer on its hands.

What?  Mobile banking?  Doesn’t every bank offer that?  If such questions just danced through your head, I certainly don’t blame you.  Mobile banking is now a personal finance staple, and any single new iteration isn’t likely to be that big of a deal.  But just let me explain.

You see, the Liquid Card’s $4.95 monthly fee pales in comparison to what people routinely shell out to cash checks (up to 10% per check).  The fact that you can load checks directly onto the Liquid Card at no extra charge and then access your money for free therefore makes it almost perfectly suited for check cashing – one of a prepaid card’s primary uses.

That’s where the addition of mobile banking comes into play:  It takes “almost” out of the equation by enabling Liquid cardholders to use Chase’s helpful QuickDeposit tool and giving the Liquid Card the potential to be a truly disruptive force in the check cashing industry.

“QuickDeposit is a service that allows you to deposit your check with the Chase Mobile App.  Just take a picture of the front and back of your endorsed check and send it using the Mobile App,” said Lauren Francis, Chase’s vice president of media relations, via e-mail.  The App is now available to Chase Liquid customers on the iPad®, iPhone®, Android and BlackBerry® platforms as well as through Chase.com using the mobile phone’s browser.”

In other words, you longer need to seek out one of the 5,500 Chase bank branches or 17,500 deposit-enabled ATMs nationwide in order to turn checks into cold hard cash.  And you certainly don’t need a check cashing store.  Either a smartphone or a simple Internet connection will now do the trick.

Therefore, while the Liquid Card’s pricing and initial suite of accompanying services gave it an early leg up on traditional check cashing businesses when it came to price, it now has them beat in terms of convenience as well.  Check cashing stores aren’t usually the most pleasant establishments to visit, after all, and everyone could use one less errand and a little bit more cash in their wallet.

There are currently 13,000 check cashing institutions in the United States, which cash more than $80 billion worth of checks per year and bring in $1.6 billion in revenue, according to the MSG accounting and business valuation firm.  We’ll just have to see how next year’s numbers stack up in order to judge how quickly Chase can turn Liquid into gold.

Ultimately, while we all expected prepaid cards to give debit cards a run for their money after the passage of the Durbin Amendment, which capped debit card swipe fees and cost banks $8.06 billion in annual revenue, no one projected them to also become check-cashing killers.  They clearly have, however, and that’s great news for consumers.

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