Kmart Is Getting Into the Check-Cashing Business

Earns Sears Holdings
AP Photo/Paul Sakuma

Kmart (SHLD) announced today that it will be rolling out in-store check-cashing services at the vast majority of its U.S. locations.

The service will be available to members of the retailer's Shop Your Way rewards program. Fees for the service will range from free in some states to as much as $3 a check. That flat rate compares favorably to other check-cashing institutions, which often charge a percentage of the check's value, which can significantly cut into customers funds.

Customers will be able to cash government checks of up to $2,000 and payroll checks up to $1,500. Kmart will also take the somewhat unusual step of cashing personal checks, though those are capped at $400 to account for the heightened risk of the check bouncing.

The nationwide roll-out follows a test run that began last October. While the company had tested putting the money onto prepaid debit cards, customers preferred the convenience of just turning their checks into cash.

Kmart isn't the only retailer to have had the bright idea of letting customers cash their paychecks in stores -- Walmart does it, too. And it's clear why. As discount retailers, Kmart and Walmart (WMT) rely heavily on the low-income shoppers who are most likely to rank among the tens of millions of unbanked and underbanked Americans. Offering check-cashing services gets this customer base in stores, and then hands them a wad of cash to spend while they're there. And by limiting it to members of its loyalty program, the retailer increases the odds that the people using it are going to be loyal Kmart shoppers.

"Our Shop Your Way members [account for] 65 [percent] to 70 percent of all purchases, and they spend more than non-members," says Jai Holtz, vice president of financial services for Sears Holdings. "We want to build on that engagement by giving that customer more utility at the Kmart store."

In other words, cashing customers' paychecks for them while they're standing in the store is going to get them to spend more money. Holtz wouldn't elaborate on whether Kmart expects to make money on the check-cashing program itself, but this makes good business sense either way.

And offering such services to low-income shoppers is going to become even more popular as discount retailers fend off competition from dollar stores. Earlier this year, Sears announced a lease-to-own program for customers who lacked the credit to finance big purchases. And both Kmart and Walmart will offer free layaway for holiday shoppers this Christmas season.

Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at, and follow him on Twitter at @Brownellorama.

Increase your money and finance knowledge from home

Managing your Portfolio

Keeping your portfolio and financial life fit!

View Course »

Getting out of debt

Everyone hates debt. Get out of it.

View Course »

Add a Comment

*0 / 3000 Character Maximum


Filter by:
Fred Bird

Damn - I just got done writing all of this stuff here for the post then they wiped it all out!
K-MART check cashing DENIED to cash my check!
Why/ I don't know - I called the company who oversees this for K-MART and they wouldn't/couldn't tell me why I was denied!
I have been cashing these payroll checks for the amount of $350.00 for over a year at a local grocer without incident!!!!!!!!!
Now, being a REWARDS member, and being that K-MART is now closer to my home, and a bit cheaper, I thought I would go there NO LUCK!

February 20 2014 at 4:29 PM Report abuse rate up rate down Reply

While check cashing may never be a good deal, the fees at WalMart and Kmart are better than a typical check cashing operation.

September 10 2013 at 10:24 AM Report abuse rate up rate down Reply

So they can cash checks of people who don't make enough to use a bank or have a check book. And then charge these low income people money to cash their small checks? Does not make sense to me, ad another good reason why I don't go to K-Mart or Sears for that matter!

There is one K-Mart in my area that I refuse to step foot in again. The last time I was there, I tried to get a electric cart as I am handicapped. I only went so far when here come two boys on electric carts playing with them and chasing each other around the store, while their mothers laughed. Shortly after this I made my way to the back of the store to use the rest room. When I came out her was a young black boy on my electric cart, (I had things in the basket to purchase) and his mother was telling him how to make it go. When they saw me, I use a cane, the boy jumped off and the mother turned away right away pretending not to see me. As I started back to the front of the store to find my friend I was shopping with, my cart started to die. I made it back to the front of the store only to find the one other cart there dead and not plugged in. It was so dead it would not move one inch. So I had to get a push cart, put my things in this cart and proceed back into the store. As I went past the service desk, the lady working there was watching the first two boys, hot-rodding around and making hot-rod car sounds. I asked the lady at the service desk if this was the store's policy to allow the kids to take the electric carts to play with so that their handi-capped customers have none? She just shrugged and walked away. I did go online and complain about this to K-Mart and they did write back to appologize. A lot of good that does. They also said that the manager of this store would contact me! Guess what? I never did hear from the manager. I recontacted the person online to report this and they again said the manager would contact me. This happened back in early June, and I am still waiting for someone to contact me! As my son said, "don't hold your breath!" I was at a different company store and we got to talking about what happened to me. The man there said that they will chase kids or anyone who takes one of these carts that does not need one or they are just playing with the cart. More stores should do this. And the K-mart I was talking about only has 4 electric carts compared to about 15 at the local Walmart! Guess I will have to stay with Walmart, I don't think K-Mart wants my business!

September 09 2013 at 10:10 PM Report abuse rate up rate down Reply
1 reply to Kay's comment

and u think its any better at wal-mart guess again i know i used to work at wal-mart and know the same chit happens at wal-mart

September 10 2013 at 1:00 AM Report abuse rate up rate down Reply

My local Goodwill has better merchandising and a better dressed, profesional looking staff. I hate going to Kmart, always come out using hand sanitizer

September 09 2013 at 3:51 PM Report abuse rate up rate down Reply

They should get into a low cost payday loan business,,, cut cost in half and make a fortune,,

September 09 2013 at 3:29 PM Report abuse rate up rate down Reply

Somebody at Kmart/Sears is finally wising up. There are a lot of folks down at the bottom of the economic barrel and, since most see Kmart as already being there as well, it only makes sense to cater to them. You can tell by their kids' hip-hop rap commercials that's the demo they're targeting (sorry Target).

September 09 2013 at 3:22 PM Report abuse +1 rate up rate down Reply
1 reply to rtmsluci's comment

My opinion of Sears-Kmart isn't going to improve until they bring Craftsman hand tool production back to the USA!

September 09 2013 at 4:24 PM Report abuse +1 rate up rate down Reply
1 reply to pm0501's comment

I'm not sure who makes Craftsman tools today. It once was Stanley and then it was Danaher. Danaher also makes Matco tools.
So Sears probably has no say in where the tools are made.

September 09 2013 at 5:26 PM Report abuse +1 rate up rate down