Besides, what would he do with that extra money? “I’m not a greedy individual,” he said. “I’m fine with the one store.”
Modest” is not a term anyone would use to describe the ambitions of a thirty-two-year- old junior mogul named Fraser MacKechnie. MacKechnie is the chief operating officer of Amscot Financial, a family- run, all-purpose Poverty, Inc. enterprise (check cashing, payday loans, tax prep, money orders, prepaid credit cards) with more than 170 stores and 2,300 employees stretched across thirteen counties in central Florida. A tall, thin man with a wedge of blond hair, MacKechnie was featured in a panel discussion (“Marketing Strategies That Improve Perception and Profit”) I attended on the first morning of the check cashers’ convention. He spent thirty minutes sharing the tricks and tips that he, his father, and his brother have learned in operating what is widely considered one of the better run and more successful regional powerhouses.
MacKechnie began by stressing the “all-important” issue of “curb appeal.” Aim to look like a McDonald’s, he counseled; look to chains such as Starbucks for ideas. “We make a concerted effort to blend in and look like any national retailer,” he offered. He also took on what might be described as the third rail of check cashing in the late 2000s—what he dubbed the “highly controversial issue” of direct deposit (I would attend a later workshop titled “Direct Deposit: Friend or Foe”). Many in the industry might fight direct deposit because it means losing the check- cashing fee, MacKechnie said, but at Amscot they’ve taken the opposite tack and offer their customers a direct deposit option. It has meant a short-term drop in revenues, MacKechnie acknowledged, but they also feel they’re holding on to some customers as they move up the economic ladder. Think of the loyalty that builds, he counseled the three dozen or so people sitting in the audience. Invariably some of those customers will slide back down that ladder—especially in the current economy—“and then you’ll be there to cash their unemployment checks.” Think as well of the PR benefits. “It lets us present ourselves as more of an integrated financial institution,” he said. “It helps give us a story when we talk to reporters.”
If MacKechnie had one message to impart above all others, it was that today’s Poverty, Inc. entrepreneur needs to become indispensable. Sell monthly commuter passes, lottery tickets, and postage stamps. Let people pay their parking tickets at your offices. You won’t make much, if any, money on any of these items but customers will have extra reasons to stop by your stores and, more important, you’ll find yourself with a strong set of friends when the industry is under attack. “We figure if we work with and become an arm of government,” MacKechnie said, “they’ll hopefully be less likely to do away with us as it will directly affect them.” Similarly Amscot has offered its stores to local gas and electric companies anxious to shed the costs of operating satellite offices. “They’re not much of a moneymaker for us,” he said of these deals, “but they make us truly part of the fabric of the community.”
Meeting with elected officials should be another priority. “It’s not just about giving contributions,” MacKechnie said. Sell your story. Show them the quality of your stores. Let them see what you do. “And then make sure you issue a press release about the visit,” he said. MacKechnie figures that he, his brother, and their father have met with more than two hundred elected officials.
Throughout the weekend, the check cashers, payday lenders, and others taking the stage in Las Vegas patted themselves on the back for all they were doing on the philanthropy front. But sitting in the audience I often had the opposite reaction: That’s the extent of your giving? The first time I had that feeling was listening to MacKechnie. The numbers he was talking seemed paltry for a company with Amscot’s size and reach—$500 here, $500 there— and mainly he stressed the public relations advantage of sharing bits of their largesse. “Let the broader community know you care,” he advised. “Make sure you send out a press release whenever you make a contribution.” Later I checked and learned the company issued eleven such press releases in 2008, each announcing a $500 donation, or a total of $5,500. That worked out to about $32 per store.
MacKechnie had one more idea to share before turning over the microphone: Amscot has banned the “at times controversial phrase ‘payday loan.’” They stopped using the term in promotional materials, he said, and they no longer use it in press releases. Instead they now offer a “life-line product” called a “cash advance.” “We figure that way we can avoid some criticism by not being lumped in any time there’s something negative written about payday,” he said.
Mike Hodges of Nashville had made the same decision. When he started in the business in 1996, at the age of twenty-four, Hodges did nothing but payday loans. But by the time of the check cashers’ show near the end of 2008, he was operating twenty stores and building a twenty-first and each provided, among other fee-generating services, check cashing, auto title loans, money transfers, and prepaid Visa cards. But though he might have started off in the payday business, that’s not a word you’ll hear watching one of the commercials his company, Advance Financial, runs on local television stations, and it’s not a word you’ll hear spoken by his clerks, all of whom have been instructed to use the term “cash advance.” “The term ‘payday’ has become the black skull and crossbones of our industry,” Hodges complained.
Hodges and his wife, Tina, who helps him run Advance Financial, were my luncheon companions on my first day at the convention. Mainly that meant listening to Mike Hodges rail about the big chains that run the payday industry. Payday is not an easy sell given what he described as a cultural bias against “the waitress with three kids who is short $200 on her rent,” but industry leaders haven’t helped their cause much. “It’s like our industry is just now figuring out that we’re not selling bottled water,” he said. For a long time the big chains have been so focused on opening new markets that they have failed to do the hard work of educating the wider public. “They’ve put much more effort into lobbying and not enough into public relations,” Hodges said. As a result, “We’ve let ourselves become easy targets at the hands of consumer advocates.”
Despite that, business remained good inside Advance Financial through hard economic times, so much so that Tina Hodges’s main complaint was a worldwide credit freeze that put their expansion plans on a shelf. I expressed amazement over twenty-one stores in a single metro area and Tina Hodges shrugged. “We could have a lot more,” she told me. But with credit tight, any money committed to opening more stores means less money out on the streets. “With twenty stores, they’re not rich yet,” Steven Schlein told me when I brought up the Hodgeses the next time we met. “But they’re making a good living.” He wasn’t much interested in talking about Mike Hodges’s criticism but he was eager to learn more about Advance Financial. He was more impressed when I told him its stores offered much more than cash advances, including check cashing, debit cards, and beyond. He let out a little whistle of air. “Twenty stores is a lot,” Schlein said. “The number I hear is $100,000 as a ballpark for profits per store. That’s $2 million a year.”
There was a small convention floor upstairs from where the workshops and the speeches were held. There large and familiar companies such as Western Union and H&R Block shared exhibit space with the more modest-sized booths occupied by small companies like Citylight Bullet Proof (“for all your bulletproof needs”),
Over the years there have been plenty of companies to do just that, starting with Western Union decades ago. As if intent on strutting its central place in the check-cashing industry, Western Union occupied a stretch of real estate in the middle of the convention floor so large that it would have been impossible to miss, even if the company hadn’t bothered to hire an Elvis impersonator. Squadrons of sales people dressed in the company’s familiar yellow and black didn’t talk to visitors to the booth one-on-one so much as they swarmed them in threes or fours. Western Union may be synonymous with the telegram, one explained to me, but the company had exited that business altogether a couple of years ago. Nowadays, the company, a global powerhouse that booked $5.3 billion in revenues in 2008 and $1.2 billion in pretax profits, makes nearly all its money wiring money across borders, primarily through deals with third parties. “We’ll cut franchise deals with anyone who’ll have us,” another of the buzz team told me. “We’ve got deals with the big discount drugstore chains, with grocery stores, with clothing stores.” But Western Union’s best partners have been the country’s check cashers and other Poverty, Inc. businesses, all of which earn a small amount of the $50 or so Western Union charges for every $1,000 a customer wires overseas. And that’s only the start of the benefits, according to a Western Union brochure I took with me.
