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Check cashing business opening on Bailey Avenue in Buffalo

With its stately white columns supporting a grand overhang entrance, its red-brick facade, its white pointed cupola, and the bright green lettering spelling out the business name on the front and side, the one-story building at Bailey and Westminster avenues looks every bit the majestic bank branch that it used to be.

But instead, it’s now home to the city’s newest legal check-casher – a business often seen as the opposite end of the financial spectrum from a bank.

The new Bailey Check Cashing will be opening for business April 25 in the former HSBC Bank USA branch at 3101 Bailey Ave., operating under a new license granted by the state Department of Financial Services. Built in 1939, the 4,198-square-foot building sits on 0.26 acres just north of Kensington Avenue.

The business, owned by Buffalo Financial Services, will offer state-regulated check-cashing, bill-paying and other financial services to consumers and communities on Buffalo’s East Side. The business primarily serves those without access to traditional banking services and accounts. Banks generally do not cash checks for noncustomers.

Banks and consumer activists argue that check-cashers are costly and prey on the poor, but the owner of the new Bailey business said he wants to raise the bar.

“Since our newest building is a former bank, it helps to change the perception of check-cashing establishments,” said Araif Ali, CEO of Buffalo Financial Services, which also owns and operates Delavan Check Cashing.

State law bars any business from cashing checks without a state license, and also restricts the fee that is charged to a certain percentage of the check’s face value, currently 2.01 percent. That means a $20.10 fee for a $1,000 check. Such companies rely on a high volume of checks and other services, such as bill payments or money orders, to support their operations.

There are currently 97 licensed check-cashers in the state, with the vast majority in New York City and its suburbs. Only four licensed firms operate in Buffalo – three on the East Side and one on the West Side – leaving consumers locally with limited options if they don’t have bank accounts.

However, a Buffalo News investigation in 2006 found a host of corner stores, gas stations and other convenience outlets in the city that were illegally cashing checks, and charging fees of as much as 10 percent of the check’s value, particularly on tax refund checks. State officials at the time said they would investigate and take action against the offenders, but Ali said the illegal activity is still occurring, with some businesses even blatantly advertising their check-cashing services on signs outside their storefronts.

Illegal check-cashing can be reported to the state Department of Financial Services at (800) 342-3736 or online.