What is a check casher bond?
A check casher bond is a type of license and permit bond the government requires for payday check-cashing businesses in some states. If you want to start a check-cashing business, you may need this bond to obtain your license. The bond’s purpose is to protect customers from fraudulent and unethical business practices.
These bonds may also go by other names, such as check cashing bonds, payday lending bonds, or deferred deposit bonds.
What are check cashers or check cashing services?
Check cashers can provide consumers with small, short-term, unsecured loans with high interest rates. Other check-cashing services include cashing paychecks without a bank account, money orders, and electronic bill payments. Some check cashers can also provide customers with payday advances or payday loans.
Customers often include those without a bank account, who need cash immediately, or who want the flexibility that check-cashing businesses offer, such as 24/7 services.
Get Your Check Casher Bond:
- A check casher bond is a type of license and permit bond the government requires for payday check cashing service businesses in some states.
- The bond agreement assures authorities that you (as a check casher) can perform your job properly.
- The bond protects customers if you violate a law that ends up costing them money.
- Bond requirements can vary from state to state, ranging from $5,000 to $50,000.
How does a check casher bond work?
Like other types of surety bonds, check casher bonds involve three parties:
- Surety: Underwrites the bond and agrees to cover valid claims
- Principal: Check-cashing business that buys and posts the bond
- Obligee: State authority that requires the bond
The bond agreement assures authorities that you (as a check casher) can perform your job properly. By signing it, you agree to follow the rules and regulations of your industry. The bond also offers protection for your customers if you violate a law that ends up costing them money. If this happens, your customer can file a claim against your bond.
If the claim is valid, the bonding company may pay the claimant for the damages – up to the full amount of the bond. You will then be held liable for repaying your surety the amount they covered for you.
Before determining how much your check casher bond will cost, you need to know the bond amount required for the state you live in. Then you’ll cover a small percentage of that amount based on your credit score and other background details.
The bond amount can vary significantly from state to state, ranging from $5,000 to $50,000. If you have strong credit, you could pay as little as 1-5% of the bond amount as your premium. If your credit score is lower, you may pay up to 10% or more.
If you operate your business in any of the following locations, you may need to post a check casher bond to service customers:
- District of Columbia
How to Get a Check Casher Bond
ZipBonds offers the fastest and most secure option for getting the surety bonds you need. Our all-digital platform is intuitive and straightforward. Apply today online or call us at 888-435-4191 to speak with an agent directly.
Founders Ryan Swalve and Zach Mefferd formed the vision for ZipBonds.com when they realized how overly complicated it was to help clients place surety. The frustration of being unable to incorporate the technology they’d used in other insurance-focused projects left them thinking “there has to be a better way.”
Fast forward a couple of years, and that better way is the impetus of everything we do at ZipBonds. We constantly look for innovative ways to improve the bonding process for our clients and agents. Our team comprises individuals who understand all angles of surety – for companies, agencies, and individuals. Incorporating everyone’s point of view to improve the process while simultaneously integrating cutting-edge technology is what sets our business apart.