Ten years ago 1 wrote a book entitled, Fringe Banking: Check-Cashing Outlets, Pawnshops, and the Poor. It focused on the operations of check-cashing outlets and pawnshops, explained who used these "fringe banks" for financial services and why, and documented the rapid growth in fringe banks in the 1980s and early 1990s. Here I review major changes in fringe banking that have occurred in the decade since then.

Why the explosive growth in payday lending? Ironically, payday industry officials point to banks themselves. They assert that payday loans look relatively cheap to their cash- strapped customers compared to high NSF fees, which accompany bounced checks, retail service charges for returned checks, and/or late fees associated with missed rent or utility payments. A payday loan can help customers avoid these costs, as well as avoid damage to their credit scores from NSF transactions. They contrast the $40 billion in payday loans last year with studies showing $22 billion collected from consumers in NSF fees in 2003, and another $57 billion in late fees.

My focus now, however, is not just on pawnshops and check-cashing outlets (CCOs) but also on payday lending. 1 made this change for two reasons. First, payday lending has been the most rapidly growing segment of fringe banking for the past ten years and now is probably as large as, or larger than, pawn-broking. Second, one cannot discuss changes in pawnbroking and check cashing without discussing the influence that the explosive growth in payday lending has had on these industries.