RELATIVE TO THE APPLICATIONS OF
WAL-MART STORES EAST, LP
TO PROVIDE CHECK CASHING SERVICES
AT ITS 44 MASSACHUSETTS STORES
Wal-Mart Stores East, LP doing business as Wal-Mart Stores ("Wal-Mart" or the "Petitioner") Bentonville, Arkansas has petitioned the Massachusetts Division of Banks ("Division") to become licensed as a check casher at its 44 store locations in Massachusetts. Wal-Mart filed one master application and 43 supplemental applications (the "Applications") with the Division on October 31, 2005 to provide check cashing services. Wal-Mart's stores in the Commonwealth consist of 41 discount retail stores and 3 super center stores. The Wal-Mart stores are located in 44 separate Massachusetts municipalities. The applications were filed pursuant to Chapter 169A of the General Laws ("Chapter 169A") and its implementing regulations, 209 CMR 45.00 et seq. (the "Regulations") and collectively the "Check Cashing Law" which govern the licensing, operation and supervision of a check casher. The Applications were supplemented by the Petitioner on its own or as required by the Division several times during the extensive review process. Supplemental filings were received in November, February and April. Additionally, as described herein, supplemental information was presented by Wal-Mart during the public hearings.
The Administrative Process and Public Hearing
Wal-Mart's stores are located across the Commonwealth ranging from North Adams in the West to Falmouth on Cape Cod. The Division gave extensive review to the geographical spread of the store locations in order to determine the best sites for the Division to hold consolidated public hearings based on its grouping of the stores. As a public agency, the Division sought to the greatest extent possible to use state properties which could assist in facilitating the public hearings in a timely sequence and in an appropriately sized room or auditorium setting. The Division scheduled seven hearings to be held over a three week period in June. Of the seven hearings four were held in community colleges, one at a state college, and one in a municipality's public school. For one of the pubic hearings the Division used a function room of a hotel in the area since state properties were not readily available.
The hearings were conducted by a panel from the Division consisting of the Commissioner of Banks and/or other senior staff members. Numerous other personnel of the Division served as support staff for all of the seven off-site public hearings. The Division's standard hearing format was followed. Under that procedure, the Petitioner was required, at each hearing, to present its case for approval of the Applications for which the hearing was being held. Upon conclusion of that presentation the Division would ask specific questions of Wal-Mart generated from the documents submitted, its oral testimony or issues raised at prior hearings. Other testimony in support of the Applications, if any, would then be taken before closing the proponents segment of the hearing. The Division would then take testimony in opposition to the Applications.
For all public hearings on an application before it, the Division sends notices to public officials in impacted communities as well as to trade groups, community groups and other interested parties. The Division's expansive efforts to notify the public of the seven hearings on the Wal-Mart Applications reflected the number of communities affected. Over 200 individual notices were mailed to federal, state and municipal officials who represented areas in which a Wal-Mart store is located. Similarly, trade groups, community organizations and other parties were separately notified. Additionally, the Division directed that the notice of hearing be published in 20 separate newspapers throughout the Commonwealth and covering the areas where the Wal-Mart stores are located. The public hearing schedule, as usual, was posted on the Division's website as well as included on the Division's monthly Activity Report of pending matters which was electronically sent to approximately 750 subscribers including banks, credit unions, licensed entities and other interested parties beginning in the April Activity Report. Moreover, the Division took the additional step of issuing a press release to inform the public of the locations, dates and times of the public hearings as well as the open comment period.
Wal-Mart's Applications requested approval to provide check cashing services at its 44 stores in Massachusetts located at: 777 Brockton Avenue, Abington; 30 Memorial Drive, Avon; 250 Hartford Avenue, Bellingham; 700 Oak Street, Brockton; 66-4 Parkhurst Road, Chelmsford; 591 Memorial Drive, Chicopee; 55 Brooksby Village Way, Danvers; 42 Fairhaven Commons Way, Fairhaven; 374 William S. Canning Boulevard, Fall River; 137 Teaticket Highway, Falmouth; 121 Worcester Road, Framingham; 677 Timpany Boulevard, Gardner; 337 Russell Street, Hadley; 295 Plymouth Street, Halifax; 1755 Washington Street, Hanover; 280 Washington Street, Hudson; 301 Massachusetts Avenue, Lunenburg; 780 Lynnway, Lynn; 70 Pleasant Valley Street, Methuen; 1470 South Washington Street, North Attleboro; 830 Curran Memorial Highway, North Adams; 506 State Road, North Dartmouth; 72 Main Street, North Reading; 200 Otis Street, Northborough; 180 North King Street, Northampton; 555 East Main Street, Orange; 742 Main Street, Oxford; 555 Hubbard Avenue, Pittsfield; 300 Colony Place, Plymouth; 301 Falls Boulevard, Quincy; 36 Paramount Drive, Raynham; 450 Highland Avenue, Salem; 1180 Fall River Avenue, Seekonk; 100 Charlton Road, Sturbridge; 1105 Boston Road, Springfield; 262 Swansea Mall Drive, Swansea; 333 Main Street, Tewksbury; 550 Providence Highway, Walpole; 352 Palmer Road, Ware; 3005 Cranberry Highway, Wareham; 137 West Boylston Road, West Boylston; 141 Springfield Road, Westfield; 740 Middle Street, Weymouth; and 1161 Providence Road, Whitinsville.
The Division's hearings were held in seven different geographic areas of the Commonwealth thereby affording interested parties a more convenient opportunity to provide oral or written comments. Additionally, in consideration of expected public interest, six of the seven hearings were scheduled at 6:00 P.M. while one was specifically set at 2:00 P.M. The hearings were held on: June 5, 2006, at 6:00 P.M. at Berkshire Community College, Pittsfield (primarily for its stores in Pittsfield and North Adams); June 6, 2006, at 6:00 P.M. at Mount Wachusett Community College, Gardner (primarily for its stores in Gardner, Hudson, Lunenburg, Orange, and West Boylston); June 8, 2006 at 6:00 P.M. at the Sheraton Framingham, Framingham (primarily for its stores in Framingham, Bellingham, Northborough, Northbridge, Oxford, and Sturbridge); June 12, 2006, at 6:00 P.M. at North Shore Community College, Lynn (primarily for its stores in Lynn, Chelmsford, Danvers, Methuen, North Reading, Salem, and Tewksbury); June 13, 2006, at 2:00 P.M. at Springfield Technical Community College, Springfield (primarily for its stores in Springfield, Chicopee, Hadley, Northampton, Ware, and Westfield); June 14, 2006, at 6:00 P.M. at UMass Dartmouth, North Dartmouth (primarily for its stores in North Dartmouth, Fairhaven, Fall River, Falmouth, North Attleboro, Raynham, Seekonk, Swansea, and Wareham); and June 21, 2006, at 6:00 P.M. at the Broadmeadow School, Quincy (primarily for its stores in Quincy, Abington, Avon, Brockton, Halifax, Hanover, Plymouth, Walpole, and Weymouth).
The primary purpose of holding seven public hearings was to obtain comment from interested parties particularly from affected municipalities in the area in which a Wal-Mart store was located. However, as specified in the hearing notice, the Division would accept comments at any of the public hearings on any of the 44 Applications. Despite the Division's enhanced notice of hearing efforts, the scheduling of most hearings in the early evening and locating the hearings at major area facilities, the hearings were sparsely attended by the public. Staff of the Division estimate that less than ten individuals who were not affiliated with any interested party attended the public hearings. Only one such individual testified. For the most part, attendees consisted solely of officers and employees of local financial institutions, licensed check cashers and representatives of trade associations. The public hearing process, as described previously, resulted in slightly over seven hours of oral testimony and questions by the Division and the responses thereto. The response of public officials notified of the pending Applications was minimal as described hereinafter. The public comment period closed on June 28, 2006.
The Division has reviewed the Applications as well as the oral and written testimony received at the public hearings and during the open comment period which were applicable to matters within the Division's jurisdiction. Comments were received from public officials, trade associations, community organizations, individuals representing local banks or credit unions, licensed check cashers and one consumer. The Petitioner, as requested by the Division at the public hearings, submitted supplemental information or subsequently testified at a later hearing on issues raised during the proceedings. The Division's review focused on the statutory and administrative criteria which are discussed herein.
The Check Cashing Law
The application process for a check casher license includes the review of an applicant's financial responsibility, character, reputation, integrity and general fitness in order to command the confidence of the public and demonstrate the belief that the business will be operated honestly, fairly, soundly and efficiently in the public interest as set forth in Chapter 169A, § 2. In addition, the Division must be satisfied that the proposed business and hours of operation would not be detrimental to the economy or the public safety of the area to be served. Such factors to be considered by the Division include the applicant's demonstration of public need for the establishment of a check cashing business in the Primary Service Area ("PSA") specified in each application including the number of financial institutions in the PSA which provide check cashing services, consideration of the convenience it would provide to the people who would be served, or any factors that would be detrimental to the economy or the public safety in the area.
The Check Cashing Licensing Law, Chapter 169A, § 3 states, in part, "The commissioner may, after such hearing and notice thereof as he may deem necessary, reject an application for a license if he is not satisfied that the financial responsibility, character, reputation, integrity and general fitness of the applicant, and of the members thereof if the applicant is a partnership or association, and of the directors and principal officers if the applicant is a corporation, are such as to command the confidence of the public and to warrant the belief that the business will be operated honestly, fairly, soundly and efficiently in the public interest consistent with the purposes of this chapter, or that the proposed business and the hours of operation, as specified in the application, would not be detrimental to the economy or the public safety of the area to be served . . ." Other statutory criteria for denial of an application are set out in section 3 of Chapter 169A.
Pursuant to Chapter 169A, § 3(e), the Commissioner may deny a license application if "…the applicant fails to demonstrate a public need for the establishment of a check cashing business in the area specified in such application; provided, however, that in determining whether demonstration of public need has been satisfied, the commissioner shall consider, but shall not be limited to consideration of, the number of financial institutions in such area providing check cashing services, similar services provided in such area by nondepository institutions and such other factors which would indicate that the approval of the application for license would not provide a convenience to the people who would be served by the applicant or that it would be detrimental to the economy or the public safety in such area."
Wal-Mart and the Applications
The Petitioner is an indirect, third tier subsidiary of Wal-Mart Stores, Inc., a Delaware corporation (the "Corporation"). The Corporation is a global retail enterprise comprised of three business segments. Those operations include an international group; Sam's Clubs for small businesses; and the retail outlets. The outlets consist of super centers, discount stores and neighborhood markets. The distinction among the outlets is primarily based on the size of the stores and consequently the merchandise and goods, including food products, available for sale.
As noted above, the Applications were for 41 discount stores and 3 super centers. The four Sam's Clubs that operate in Massachusetts are not seeking to be licensed as check cashers. The Petitioner operates in all 50 states and has total assets of $52,717,022 with a net worth of $47,641,411 as of January 31, 2005, the latest year end figures at the time of filing. According to the Petitioner, in response to questions at a public hearing, no significant changes have occurred in its financial condition since the Applications were submitted.
Wal-Mart's 44 stores in Massachusetts are generally constructed and sited in a consistent manner with the super centers being distinguished by the larger size and available food products. Forty-one stores are free standing buildings with the remaining three attached to shopping centers. They are located in commercial settings with extensive property for parking. No store has less than 200 parking spaces and 35 have space for 300 or more vehicles. Often, long access roads lead to a Wal-Mart store. The vast majority of customers arrive by automobile.
An overview of Wal-Mart's check cashing plan is set out in the Applications. It provides Wal-Mart's analysis of the market available for a check cashing business. That overview states that the check cashing industry serves the needs of the lower and middle income workers who often work in the service sector. Wal-Mart lists several reasons why consumers use its check cashing services. Those reasons include the inability to meet minimum balance or other requirements of a financial institution; the need for financial services outside of traditional bank hours as well as the need for immediate cash; and distrust of banking institutions.
During the course of the review process Wal-Mart was providing check cashing services at its stores in 45 states. In numerous states it was able to initiate such services without regulatory approval. Upon questioning by the Division at public hearings, Wal-Mart stated that there was no opposition by financial institutions to its check cashing services in those other states. Moreover, Wal-Mart previously stated that it delayed seeking to provide check cashing services in its stores in Massachusetts due to the Commonwealth's Check Cashing Law and the Division's extensive administrative procedures.
Presently, Wal-Mart provides financial services at its 44 Massachusetts stores. Four stores contain a full service branch office. Two of the four are offices of different credit unions while two are bank branch offices. According to the Petitioner, the size and layout of the other retail stores are less conducive for hosting a banking office. Wal-Mart currently is licensed by the Division as an agent for MoneyGram Payment Systems, Inc. ("MoneyGram") pursuant to a separate statute, Chapter 169 of the General Laws. Under those licenses customers can transfer money to people in other countries and obtain money orders. More importantly for consumers, they can wire transfer money to people in other states or parts of the Commonwealth. No license is necessary for such domestic money transfers. The regulatory and administrative procedures for obtaining a license from the Division under the Check Cashing Law are very similar to those to obtain a money transmittal license under said Chapter 169 or be licensed as an agent.
Wal-Mart also is an agent for MoneyGram for money orders which are regulated under section 4 of Chapter 167F of the General Laws.
As set out in the Applications, Wal-Mart will cash only the following types of checks: payroll, government, insurance, money orders and preprinted checks. The Applications state that the fee that will be charged for any such check will be 1% of the face amount of the check with a maximum fee of $3.00. Compared to many other licensed check cashers, the proposed fee is substantially lower than the fees charged by other licensees. Wal-Mart believes that by not cashing personal checks it will greatly reduce its risk of loss.
As discussed at the public hearings, Wal-Mart would provide check cashing services at two areas within its stores. One option for a consumer would be to go directly to the customer service area to cash a check covered by Wal-Mart's policy. The other option would allow the customer to complete his or her shopping and present the qualifying check at the check out station both for payment of the goods and receipt of the balance in cash. Wal-Mart testified that 98% of the face value of the checks cashed was without merchandise purchases. In its testimony, Wal-Mart also stated that in 2005 it averaged approximately one million checks cashed per week.
In order to comply with the federal USA Patriot Act and other laws governing money services businesses, Wal-Mart states that it has a full compliance program and people in place implementing it. This matter was also an area of questioning by the Division at the public hearings. The compliance program covers its money transmittal business as well as its check cashing in those 45 states where it provides that service. The program is also designed to comply with federal currency transactions aggregate restrictions. Under Wal-Mart's policy a check cashing customer is limited to cashing $1,100 in checks. That limit is applicable to a single check or multiple checks equaling that amount. The limit is applicable for a seven day period. According to Wal-Mart once the aggregate limit is reached the compliance program is structured to prevent that customer from cashing a check at any other Wal-Mart store.
Wal-Mart's store locations in the Commonwealth are subject to a finding of "public need" under G.L. c. 169A, § 3(e). Wal-Mart is required to demonstrate public need for each of its 44 Massachusetts locations because Wal-Mart was not engaged in the conduct of the business of cashing checks, drafts or money orders at any of the identified locations prior to December 17, 1993, the enactment date of G.L. c. 169A.
The Petitioner identified the PSA for each of the 44 Massachusetts locations as a five mile radius surrounding each store. The PSA for each store location was based on marketing information of its customers. The Petitioner stated that the PSA was determined by market research, including zip code studies during the initial opening of a store, which indicates that customers typically are willing to travel five miles to visit a Wal-Mart store. Demographic information describing the population, housing and incomes and listings of financial institutions and check cashers within each PSA were provided by Wal-Mart.
During the public hearing, Wal-Mart indicated it has determined the public need for check cashing at its Massachusetts stores based on its experience in the 45 states in which it currently conducts check cashing activity. Further, Wal-Mart cites the convenience for customers with or without banking relationships to cash their payroll check while shopping at a Wal-Mart store. Wal-Mart stores are typically open Monday through Saturday between the hours of 7:00 A.M. and 10:00 P.M. and Sundays between 7:00 A.M. and 8:00 P.M. There are minor exceptions for a few of the stores. All stores are open everyday except Thanksgiving and Christmas. Wal-Mart stated that these hours are unmatched by other financial institutions and check cashing facilities.
The Division also heard oral comment from a consumer at the Framingham hearing in support of Wal-Mart's application to provide check cashing services at its stores. The consumer testified that she and many others do not have traditional banking relationships and depend on check cashers to conduct financial transactions such as check cashing, bill payment and purchasing money orders. Her testimony indicated that the fee structure of Wal-Mart would have a positive impact on individuals such as herself.
Wal-Mart cited several articles in support of the public need for financial services, including check cashing, for its customers who do not use financial institutions. All of the articles are contained in the Applications to demonstrate the need for such services for non-bank customers. The articles are both local and national and include a publication of the Federal Deposit Insurance Corporation and by a community affairs supervisor of the Federal Reserve Bank of Boston. In addition to the public need issue addressed by the articles, Wal-Mart submits that the articles support the position that there is a direct correlation between the use of money transmittal services and the need for check cashing for unbanked consumers. Wal-Mart stated in the Applications that it has processed almost 40,000 transmittals for MoneyGram in 2005 and is on pace to process over 75,000 transmittals for MoneyGram in 2006 from its Massachusetts stores. Based on all of the above, Wal-Mart believes that it is fair and reasonable to conclude that a high number of patrons of its transmittal services will take advantage of an added service to cash their checks.
During the process, Wal-Mart supplemented the applications to include petitions signed by several hundred individuals requesting check cashing services at the Wal-Mart locations. Wal-Mart testified at the public hearings that the petition drive was conducted only during a short time frame in conjunction with the hearings and clearly demonstrates its customers desire to have check cashing services available at each store.
The Division heard oral comments in opposition to the application at each of the seven public hearings it held. The primary opposition presented at each hearing was given by a local banker and/or staff of a banking industry trade organization (the "Bank Trade Association") representing 210 commercial banks, savings banks, co-operative banks and savings and loan members throughout Massachusetts and New England. At each hearing the local banker would provide information on the number of banks and banking offices within the area of the Wal-Mart stores which were the subject of the particular hearing. That statistical information on the number of local banking offices, each banker argued, demonstrates the lack of public need for check cashing services at Wal-Mart stores. Opposition provided by the several bankers also centered around their belief that Wal-Mart was attempting to establish a Wal-Mart brand for future consumer financial services which would have a negative impact on consumers, small businesses, and potentially the banking industry in Massachusetts. The bankers and the Bank Trade Association pointed out that community banks already provide banking services throughout Massachusetts and reach out to the unbanked population through different initiatives, including but not limited to a basic banking program. They believe that the authorization for additional check cashing stores would encourage the use of such stores and would counter the efforts of the community banks to promote consumer's use of banking services. The bankers also testified that they believed that the Wal-Mart check cashing model promoted spending by consumers rather than savings.
Also of significant concern to bankers in the Commonwealth is Wal-Mart's application to obtain an Industrial Loan Company ("ILC") bank charter in the state of Utah and to have that bank's deposits insured by the Federal Deposit Insurance Corporation (the "FDIC"). The application pending before the FDIC generated substantial oral and written testimony. At each of the public hearings, a representative of the Bank Trade Association asked the Division to defer a decision on the Applications until the FDIC had acted. Subsequent to the close of the public comment period the FDIC imposed a six month moratorium on all applications related to ILCs including Wal-Mart's pending application, in order to study the impact of ILCs on the insurance fund of the FDIC. In light of the FDIC's moratorium the Bank Trade Association, in a letter dated August 6, 2006, asked that the Division similarly postpone a decision on the Wal-Mart Applications for the same six month period.
As evidenced by this Decision, the Division has declined to postpone its action on the Wal-Mart Applications. The issues involving ILCs and the FDIC are matters subject to separate laws and different jurisdictions than the Applications pending before the Division. However, the Division recognizes the significance of the several issues related to ILCs including the separation of banking from other commercial enterprises, and the potential impact on local community banks. The Division will continue to carefully monitor these matters and articulate its position through the Conference of State Bank Supervisors ("CSBS") of which it is a member. The Division participated in the drafting of CSBS's letter dated October 10, 2006 to the FDIC supporting its moratorium to study developments relating to ILCs.
At several of the public hearings the Division heard oral testimony from individual licensed check cashers in opposition to the Applications. At two hearings representatives of several licensees also testified in opposition. Licensed Check Cashers presented arguments against the public need for additional licensed check cashing locations. On each such occasion, testimony stated that there were currently 91 licensed check cashing facilities in the Commonwealth. They argued that adding 44 licensed locations would represent an approximately 50% increase in licensed check cashers in Massachusetts which would be detrimental to those entities currently licensed.
The expressed concerns focused on the pricing of Wal-Mart's check cashing fee being capped at 1% of the face amount of the check with a maximum fee of $3.00. That fee schedule, they argue, would have a negative impact on the small check cashing establishments which currently serve the communities in which a Wal-Mart store is located. Moreover, some argued that Wal-Mart's decision not to cash riskier personal checks served as "cherry picking" only the best of the check cashing business. The Division also received written testimony in opposition from licensed check cashers. Similarly, those arguments centered on the adverse impact on the small check cashers and how Wal-Mart's entry into the business could be detrimental to consumers.
The Division also received letters from public officials to be recorded in opposition to the Wal-Mart Applications. The letters were received from one Congressman, a State Senator, and two State Representatives. Another State Representative testified in person at the Framingham public hearing in opposition and also submitted written testimony. A fourth State Representative testified at the Springfield hearing in opposition to the Applications. In summary, the basis of their opposition centered on the belief that a public need for additional check cashing services at Wal-Mart stores did not exist since local banks already provide this service; that it would create safety concerns for consumers cashing checks; and it would present a threat to small check cashers. As noted previously, the Division mailed individual letters to over 200 public officials informing them of the pending Applications, the public hearing schedule and the end of the public comment period.
Letters were received from two credit unions in opposition to the Applications. One of the two is a state-chartered credit union while the other is federally-chartered. At the Springfield hearing, one of the two gave oral testimony. Each credit union argued there was no need to add more fee based check cashing services, especially since check cashing services were available to anyone becoming a member of their credit union at no cost. Moreover, each credit union emphasized their efforts and those of other credit unions to promote thrift and savings as part of their services.
Only one statewide community group attended a public hearing and presented testimony. That testimony was received in writing at the Division's seventh and last public hearing on the Applications. That written testimony, similar to the Bank Trade Association, argued against the Applications on the basis that the Commonwealth should be promoting a consumer's use of mainstream financial services instead of check cashing facilities. Once again the basic banking program offered by banks in Massachusetts was highlighted by the community group as a low cost alternative to using check cashing services.
The burden to demonstrate compliance with all statutory requirements especially public need is placed specifically on the applicant. Sufficient demonstration of public need by the applicant is an essential statutory licensing requirement of the Check Cashing Law. It is a matter addressed by Wal-Mart in its extensive filings as well as in its oral testimony at the public hearings held by the Division. The underlying purpose of the Check Cashing Law is to protect the users of check cashing establishments and protect local communities. The statute is not intended to protect other financial institutions against competition. The Division supports competition among banking institutions by permitting banking offices to be established in close proximity to one another. This policy promotes public choice and competitive pricing in banking and credit products. This policy can also be applicable to the licensing of check cashers. In the absence of public safety and zoning issues, the Division concludes that competition with respect to fees, hours, and service can benefit customers who use check cashing facilities.
The Division has considered the arguments in opposition to the Applications raised by existing licensed check cashers as described herein. That opposition focused on the significant increase in licensees as well as the impact on check cashers in communities in which Wal-Mart operates a store. The Division gave extended review to this opposition argument. However, its review determined that these arguments generally failed when considered in light of the existing geographic distribution of licensed check cashers. Although the addition of 44 new licensed locations would numerically result in approximately a 50% increase in check cashers, the practical impact would be significantly less than those numbers represent. It is important to note that of the 91 current licensed check cashers 36% are located in Suffolk County consisting of Boston, Chelsea, Everett and Revere in which Wal-Mart does not have a store. Moreover, of the 44 municipalities in which there is a Wal-Mart Store only 11 municipalities have licensed check cashers. Accordingly, the geographic impact to Wal-Mart licensed check cashers is significantly less than the mathematical argument presented. Of those 11 municipalities, five have only one licensed check casher; four have two existing licensees; and one municipality has three check cashers. The remaining municipality with an overlap of a Wal-Mart store and licensed check cashers is Springfield which presently has 15 licensed entities. However, the Division's well established policy on competition among regulated entities as described herein would not preclude the addition of a competitor in any of those 11 municipalities.
The Division has also given significant consideration to the arguments raised by local. area bankers and the Bank Trade Association. As noted herein, they, more than licensed check cashers, were the primary opponents to the Applications through their testimony at each hearing. Opposition by bankers based on future banking services which could potentially be provided by Wal-Mart by obtaining an industrial loan company charter with FDIC deposit insurance has been addressed previously in this Decision. The Division acknowledges the statistical information provided on banking offices in communities serviced by Wal-Mart stores. However, the Division also recognized that Wal-Mart's establishment of a five mile radius around each store as the Primary Service Area, allowed for a number of additional banking offices to be included in the oppositions presentation of existing banking services.
As a matter of public policy, the Division recognizes and endorses the efforts of elected officials, community groups, the Bank Trade Association, and credit unions to bring unbanked consumers into the mainstream financial system. The Division believes that the establishment of such mainstream banking relationships is vital for unbanked consumers to improve their economic status. Through such a relationship, savings is promoted and a record is established that may lead to an extension of credit. The Division has participated in numerous programs and supported various products to achieve that goal. Despite those efforts by all interested parties, a check casher remains the option of choice by numerous consumers. The statutes allow for such businesses to operate and the Division, in order to eliminate being arbitrary and capricious, must consider the Applications on the basis of the case as described herein and the statutory criteria.
Under the provisions of the Check Cashing Law the Division must consider an application in light of public safety and under the Division's procedures an applicant must demonstrate that any applicable municipal zoning provisions are met. Public safety issues were raised by the Division at the public hearings In the Applications, as well as in its testimony Wal-Mart described its public safety and security measures. Those measures include but are not limited to, on-site security personnel with two-way radios during all hours of operation; closed circuit television cameras in-store; and cameras monitoring all parking lots as well as entrances and exits. In response to questioning by the Division, Wal-Mart stated and later confirmed that no public safety issues or incidents resulted from its implementation of check cashing services in the other 45 states. It is significant to the Division that unlike several other check casher applications, no law enforcement authority from any of the affected 44 municipalities and surrounding communities commented on any one of the Applications. Such silence may, in part, be attributed to the commercial locations of the Wal-Mart stores. Similarly, upon review, the Division has determined that no local municipal zoning provisions would affect the issuance of a check casher license in any of the 44 communities. Factors related to public safety and zoning weigh in support of the Applications.
The burden to demonstrate public need is placed specifically on the Petitioner. A sufficient demonstration of public need is an essential statutory requirement under the Check Cashing Law. Wal-Mart has sought to meet this requirement through its extensive filings and public testimony. The Division has reviewed and considered all such arguments presented by the Petitioner. In the Division's review, Wal-Mart's presentation emphasized more of its ability to offer check cashing services as reflected by its operations in 45 other states. Additionally, Wal-Mart's presentation focused on the convenience check cashing services would provide to its customers, particularly unbanked customers, so called. In consideration of all facts presented the Division does find that the commercial location of Wal-Mart stores in conjunction with the hours of operation of those stores as well as the very competitive fee structure for its check cashing services do provide an argument that a public need will be met by approval of the Applications. Although the Division believes that those arguments are thin, it finds that Wal-Mart has met the statutory requirement for public need.
The Division finds that all other such statutory and administrative requirements including minimum net worth provisions have been met by the Petitioner. Accordingly, the Division hereby approves the Wal-Mart Applications to cash checks at its 44 stores in the Commonwealth at the addresses specified in this Decision.
|October 26, 2006 |
|Steven L. Antonakes |
Commissioner of Banks