Wal-Mart Aims to Grow by Banking for the Unbanked

Two years after giving up on chartering an industrial bank in Utah, Wal-Mart us busy carving out a niche in banking for the unbanked. Its strategy has focused on its in-store Money Centers where people can cash checks, reload their money cards, buy money orders, or access similar financial services. Its focus is on serving it core customers, those low-income shoppers who often do not have bank accounts, or if they do, have limited services.

The chain is also leading the way in terms of adopting financial services technologies. It adopted electronic checking in April 2007, boosting interest in this checking service. You may have had this option performed at your local Wal-Mart or dollar store or any number of other merchants and stores. The clerk takes your check and converts it into an electronic equivalent, then hands back the check with the receipt.

Wal-Mart performed over two million money-order, money-transfer and check cashing transactions PER WEEK. Here is a list of some of Wal-Mart's more popular offerings.

Check cashing: Wal-Mart already has a 11 percent share of those who are regular users of check-cashing services. Almost half of it customers cashed a check there in the past three months. Typical Wal-Mart check cashers earn $30K or less per year. Check-cashing centers processed more than $58 billion worth of checks last year.

Prepaid Visa card: Wal-Mart recently decided to slash fees on its prepaid Visa card, putting pressure on other providers of prepaid cards. Already another major provider of such cards was forced to match Wal-Mart's retail price of the card.

Wal-Mart Discover Card: This card is actually issued by GE Consumer Finance. Both the Discover card and the Wal-Mart Money Card can be reloaded on its Green Dot network and used at ATMs, online purchases, and any merchant that accepts Visa.

Money Card: Wal-Mart already has issued two million of its Money Cards, which have been loaded with $2 billion in value. That's a lotta Sam's soda. Because of the sheer economies of scale, it has cut the activation fee, reload fee, and monthly maintenance charge to to $3 for each of those services. The reload fee can be waived if you are depositing a paycheck or by using direct deposit. Reloading the card can be performed at a Wal-Mart or at other locations linked to the Green Dot network. Wal-Mart is actually a distributor rather than an issuer.

Bill Pay: Pay car payments, cellphone, insurance, credit card bills, or even mortgage payments. There is a basic fee of 88 cents per payment, and a next-day option costs $1.88. There is even a rush option available. Pay at the customer service counter or at the MoneyCenter station, with cash, your Money Card, or a debit card.

Money Transfer/Money Orders: Provided by MoneyGram, customers can buy money orders for far less than at a local bank. Non-bank financial centers sell a total of $17.6 billion worth of money orders per year.

Check Printing: Choose checks in one of five designs, including Disney. One of the options is custom checks, if you have a business or wish to promote your own artwork or design. You can have business checks printed. You may also express reorder by going online.

Buying Stock: Wal-Mart has linked up with ShareBuilder to make it easy for even the little guy to buy stock. Under the name Wal-Mart Easy Investing, customers can pay in as little as $10 a month for a piece of America. There are no fees to withdraw funds nor a minimum deposit.

Personal and Business Printing: Customers also avail themselves of ink stamps, address labels, envelopes, and can even buy finance software.

Related issues where Wal-Mart has taken on a battle to lower fees and service charges:

Fees for Credit and Debit Cards: Wal-Mart may be the only entity with enough muscle to challenge the credit cards companies' power to dictate terms of its pricing structures. It was the main plaintiff in a class-action court case against the bank networks. At issue was the banks insistence that a vendor had to accept both their credit cards and their debit cards. It did not resume accepting MasterCard's debit card until it wrangled more favorable terms for processing debit transactions.

Wal-Mart also accepts the Tempo debit card, which has lower fees than either MasterCard or Visa. However, Wal-Mart ended its relationship with Tempo when it moved to decouple its cards from issuing banks.