United Ijaw States

As noted, much of the explosive growth in CCOs that appears to have occurred between 1998 and 2003 undoubtedly reflects in-creasing numbers of payday lenders listed as check-cashing busi-nesses. A number of observations support this hypothesis. First, a small number of states require payday lenders to hold check-cashing licenses but distinguish between the licenses held by pure CCOs, CCOs that engage in payday lending, and payday lenders that do not cash paychecks. The North Carolina Office of the Commissioner of Banks, for example, reported that 233 firms, with 1,131 lo-cations, held check-cashing licenses in that state as of year-end 2000. Of these 233 license holders, 114 were CCO—payday lender hybrids, 68 were check cashers that did not make payday loans, and 51 were monoline payday lenders.

Similarly, the Tennessee Department of Financial Institutions (2001) reported that there were 309 active check cashing outlets in the state as of year-end 2001 and cashing people's paychecks, increased employment raises the demand for their services. The large returns to check cashers from entering the payday loan business were reflected in the rapid increase in the percentage of CCOs offering payday loans. As noted earlier, in the early 1990s only a small share of CCOs offered payday loans. By 2002, available evidence suggests that a strong majority of CCOs did so in states checks for paying wages and for making government transfer payments. The Federal Reserve Bulletin, for example, reported that "the proportion of payroll payments made via direct deposit rather than paper check increased from close to zero in 1979 to about 50 percent in 2000." Similarly, the National Automated Clearing House Association reports that 51 per-cent of social security recipients used direct deposit in 1991. By 2001, 79 percent did so. Data indicate that lower-income house-holds and households headed by younger adults or less-well-educated adults are less likely to use direct deposit, but even within these categories there is a growing use. Assuming that these trends continue, CCOs may see a persistent decline in their revenues from check-cashing fees.