Wisconsin Community Currency Exchange Bond: A Comprehensive Guide

September 9, 2021

This guide provides information for insurance agents to help their customers obtain a Wisconsin Community Currency Exchange Bond

At a Glance:

• Average Cost: Between 1.5% to 7.5% of the bond amount per year based on the applicant’s credit
• Bond Amount: $5,000 per office location
• Who Needs it: All check cashers operating in Wisconsin
• Purpose: To ensure the public will receive compensation for any damages should the check casher fail to comply with licensing law
• Who Regulates Check Cashers In Wisconsin: The Wisconsin Department of Financial Institutions

Background

Wisconsin statute 218.05(2) requires all check cashers operating in the state to obtain a license with the Department of Financial Institutions. The Wisconsin legislature enacted the licensing laws and regulations to ensure that check cashers engage in ethical business practices. To provide financial security for the enforcement of the licensing law, check cashers must purchase and maintain a $5,000 (per office location) surety bond to be eligible for licensure.

What is the Purpose of the Wisconsin Community Currency Exchange Bond?

Wisconsin requires check cashers to purchase a surety bond as part of the application process to obtain a business license. The bond ensures that the public will receive compensation for financial harm if the check casher fails to comply with the licensing regulations set forth in Wisconsin statute 218.05. Specifically, the bond protects the public in the event the check casher engages in any acts of fraud or breaches any contracts made with consumers. In short, the bond is a type of insurance that protects the public if the check casher breaks licensing laws.

How Can an Insurance Agent Obtain a Wisconsin Community Currency Exchange Bond?

BondExchange makes obtaining a Wisconsin Community Currency Exchange Bond easy. Simply login to your account and use our keyword search to find the “community” bond in our database. Don’t have a login? Enroll now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email or chat from 7:30 AM to 7:00 PM EST to assist you.

At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.

Is a Credit Check Required for the Wisconsin Community Currency Exchange Bond?

Surety companies will run a credit check on the owners of the check cashing company to determine eligibility and pricing for the Wisconsin Community Currency Exchange bond. Owners with excellent credit and work experience can expect to receive the best rates. Owners with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the owner’s credit.

How Much Does the Wisconsin Community Currency Exchange Bond Cost?

The Wisconsin Community Currency Exchange Bond can cost anywhere between 1.5% to 7.5% of the bond amount per year. Insurance companies determine the rate based on several factors including your customer’s credit score and experience. The chart below offers a quick reference for the approximate bond cost on a $10,000 bond requirement.

$10,000 Community Currency Exchange Bond Cost

How Does Wisconsin Define “Check Casher?”

To paraphrase Wisconsin statute 218.05(1)(b), a check casher is any business entity who provides facilities for cashing checks, drafts, or money orders.

Exemptions to this definition include:

• Banks
• Savings and loan associations
• Credit unions

How do Check Cashers Apply for a License in Wisconsin?

Check cashers in Wisconsin must navigate several steps to secure their business license. Below are the general guidelines, but license applicants should refer to the application guidelines for details on the process.

License Period – The Wisconsin Community Currency Exchange License expires on June 1 of each year and must be renewed before the expiration date

Step 1 – Meet the Net Worth Requirements

Applicants for the Wisconsin Community Currency Exchange License must amass a company net worth (assets – liabilities) of at least $5,000 and at all times maintain a positive working capital (assets – liabilities). Applicants must submit financial statements verifying their net worth when submitting their license application.

Step 2 – Purchase a Surety Bond

Check cashers must purchase and maintain a surety bond with a limit of $5,000 per office location

Step 3 – Purchase Insurance

Check cashers must purchase insurance coverage, protecting themselves against theft and fraud, with a minimum limit of $10,000 and a maximum deductible of $1,000

Step 4 – Complete the Application

All Wisconsin Community Currency Exchange License applications should be mailed to the following address:

PO Box 7876
Madison, Wisconsin 53707-7876

Check cashers must complete the application in its entirety, and submit the following items:

• • Company financial statements
  • Proof of insurance coverage
  • Certificate of good standing (if incorporated outside of Wisconsin)
  • Criminal history reports for each company owner with a 10% ownership stake or higher
  • Resumes off all company owners with a 10% stake or higher
  • Detailed company business plan
  • Floor diagram of the company’s office (only if they are sharing space with another business)

Check cashers must pay a $600 fee (per office location) when submitting their license application.

How Do Wisconsin Check Cashers Renew Their License?

Check cashers should receive renewal instructions prior to their license’s expiration date. The Wisconsin Community Currency Exchange License expires on June 1 of each year and must be renewed before the expiration date.

What Are the Insurance Requirements for the Wisconsin Community Currency Exchange License?

Wisconsin requires check cashers to purchase insurance coverage, protecting themselves against theft and fraud, with a minimum limit of $10,000 and a maximum deductible of $1,000. Check cashers must purchase and maintain a surety bond with a limit of $5,000 per office location.

How Do Wisconsin Check Cashers File Their Bond?

Check cashers should mail the completed bond form, including the power of attorney, to the following address:

PO Box 7876
Madison, Wisconsin 53707-7876

The Community Currency Exchange Surety Bond requires signatures from both the surety company that issues the bond and a representative from the check cashing company. The surety company should include the following information on the bond form:

• Legal name of entity/individual(s) buying the bond
• Surety company’s name
• Bond amount
• Date the bond goes into effect
• Date the bond is signed
• Witness signatures for both the principal and the surety

What Wisconsin Check Cashers Do to Avoid Claims Against Their Bond?

To avoid claims made against their bond, check cashers in Wisconsin must follow all license regulations in the state, including some of the most important issues below that, tend to cause claims:

• Do not breach any contracts made with consumers
• Do not engage in any acts of fraud

What Other Insurance Products Can Agents Offer Check Cashers in Wisconsin?

Wisconsin requires check cashers to purchase insurance protecting themselves against theft and fraud. Bonds are our only business at BondExchange, so we do not issue other types of insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.

How Can Insurance Agents Prospect for Wisconsin Check Casher Customers?

Wisconsin conveniently provides a public database to search for active check cashers in the state. The database can be accessed here. Contact BondExchange for help developing a marketing piece. Agents can also leverage our print-mail relationships for discounted mailing service