More important, ACE also joined forces in 1999 with Goleta National Bank (a unit of Community West Bancshares) to strengthen and safeguard its “ payday ” loan operations. Several states had passed legislation banning the practice of “ payday ” loans because they deemed the annual interest rates on these small, short-term loans (which often exceeded 400 percent) to be usurious. To circumvent these anti-usury laws, ACE would leverage its relationship with Goleta to provide such loans in states where they were outlawed. Under the terms of the agreement, ACE would merely process “ payday ” loan applications, but Goleta – headquartered in California where the practice was legal – would actually issue the loans. (ACE would later buy back a portion of the loans.) According to the Wall Street Journal, ACE ‚ s maneuver would most likely provide “ a big boost to the company ‚ s earnings and sales. ”
As a result of its consistent attempt to increase its services at the same time that it continued to add to the number of outlets in its network, ACE ended the 20th century with excellent future prospects. Its sales had risen to $122.3 million in 1999, and its net income had climbed 35 percent. In addition to owning and operating 817 stores, ACE had added 147 franchised stores to its system. Its stock prices also had risen to all time highs. In keeping with its goal of diversifying its operations, ACE could boast at the close of 1999 that it no longer relied exclusively on check cashing to sustain sales. 8 percent of sales (compared with 90.7 percent a decade earlier).
ACE continued to pursue new market niches. After Jay Hannibal payday loan no credit check Shipowitz ascended to the position of president in 2000, the company announced that it had reached an agreement with ePOWER International (a privately held Internet technology company) to provide prepaid Internet service through ACE. “ Offering this service to our customers moves ACE closer to providing a complete line of financial-related services needed by every household, ” Shipowitz proclaimed in a press release.
Cash America International, Inc.; Check Into Cash, Inc.; EZCORP, Inc.; MFN Financial Corp.; FFP Marketing Company, Inc.; First Cash Financial Services Inc.
Milligan, John, “ A Philosophical Reflection on the Metaphysical Natures and Existential Dilemma of Check Cashers, ” US Banker, July 1, 1996, p. 26.
Tippett, Karen, “ Ace Cash, a ‘ Shadow Bank, ‚ Grows, But Expectations Outshine Results, ” Wall Street Journal, August 17, 1994.
Weil, Jonathan, “ ACE Cash Express May Be on Verge of Unchecked Growth, SatyBulls, ” Wall Street Journal, August 13, 1997.
– – , “ Ace Cash ‚ s Payday-Loan Venture Could Be Catalyst for Stock Growth, ” Wall Street Journal, September 29, 1999, p. 2.
According to US Banker, the result of these industry shifts was a “ service vacuum created by the banking industry itself. ” The Federal Reserve estimated that one-fifth of U.S. households did not have a checking account in 1983 and that 36 percent of those with annual incomes below $8,400 had neither a checking nor savings account. Check-cashing businesses filled this banking void by providing services for those who did not have a checking account at a bank. In addition to cashing checks for a fee, these stores sold money orders with which clients could pay bills.
Despite its steady gains in sales and profits, ACE ‚ s stock prices had remained low as a result of the industry ‚ s negative reputation. As an anonymous check casher told the Los Angeles Times, the industry had a “ bail bondsman image. ” To counter-balance the notion that check cashers gouged the poor to provide basic services, ACE took care to project a more positive image. Its green and white facade stores were clean and well lit, with the prices charged for various services prominently displayed, much like menus in fast food restaurants. Company officials stressed ACE ‚ s convenience and its array of services. ACE also emphasized its non-check-cashing services to help boost its image.
The pace of ACE ‚ s diversification quickened in 1999 and 2000. That year, ACE linked its Gold Cards to check-cashing terminals that doubled as ATMs. Also in 1999, ACE teamed up with Instant Auto Insurance (IAI) to provide auto insurance to customers. Moreover, ACE forged an alliance with Travelers Express Company to expand on its Bill Pay system. Beginning in 1999, ACE offered its customers the ability to pay all their bills at a single store (including mortgages and car loans). The service was the first universal bill-paying system in the United States available to walk-in clients.