Walmart says, ‘Save Money. Bank Better.’
Walmart and Green Dot announced the nationwide launch of a new mobile checking account service available exclusively through the retailer.
The service, which is linked to Green Dot’s GoBank business, offers a variety of services linked to a MasterCard debit card. The accounts do not require a minimum balance or charge fees for direct deposits or overdrafts. There is a monthly membership of $8.95 a month, which is waved with direct deposits of at least $500 a month.
To open a GoBank account, customers need to purchase a $2.95 starter kit at Walmart that comes with a temporary debit card until a permanent one arrives via mail. Customers can withdraw money from 42,000 ATMs at no charge, but will pay $2.50 for transactions on machines that are not part of its network. GoBank customers will now have the option of depositing cash into their accounts at Walmart’s stores in addition to using their mobile devices.
"Walmart customers want easier ways to manage their everyday finances and increasingly feel they just aren’t getting value from traditional banking because of high fees," said Daniel Eckert, senior vice president of services for Walmart U.S., in a statement. "Adding the GoBank checking account to our shelves means our customers will have exclusive access to one of the most affordable, inclusive and easy-to-use checking accounts in the industry."
This latest move into financial services is just another of many steps taken by the retailer since it dropped its bid to open it own industrial bank in 2007. At the time, Walmart chose not to fight Congress, which backed traditional financial institutions opposed to allowing the retailer into the business. Walmart, either by itself or with a partner, now offers credit and debit card services, check cashing, money orders, money transfers, auto insurance, tax preparation services and more through its MoneyCenters.
Discussion Questions
How is the expansion of financial services benefiting Walmart and other retailers offering them? Do you think the nation would benefit if retailers could operate their own financial institutions?
What Walmart is offering sounds more expensive than a bank. My bank charges nothing for ATM withdraws, no minimum balance and no check-printing fees. There is no mention of paper checks involved so overdrafts will be impossible. I can’t believe Walmart would just hand a checkbook to low-income people and give them a free ride if they bounce checks. As you keep reading, the fees start to add up quickly. My guess is everything revolves around a debit card so Walmart has total control to avoid overdrafts. And to withdraw money for free, you need to come to Walmart. This gets people in the store and it will increase traffic.
I don’t think other retailers would benefit. Walmart caters to the low-income, uneducated consumer. Other big retailers like Costco just don’t have that kind of demographic shopping their store. For the retailer to benefit they need to be really big and cater to the low-income, cash economy shopper that is off the traditional banking grid.
Walmart has been focused on leveraging their unique scale with banking and medical services for some years now. In my mind, more competition keeps the banking industry competitive, whereas we know in the past they have not always been.
Further, along with Apple and Google, other retailers are forming coalitions for private label payment. Walmart is clearly large and smart enough to compete with a more comprehensive financial approach.
Of course, the Walmart haters will be sounding the alarms, blaming Walmart for impending layoffs at local banks, etc. In the end, the customer will decide if Walmart succeeds in financial services, just as it should be.
A large percentage of Walmart’s customers fall into the unbanked category and might find this type of service attractive. That does not mean it is a good deal for its participants.
As David pointed out the fees add up quickly. However, many of the unbanked are that way because they are apprehensive about the banking process, so I would expect Walmart to get traction with this customer group. On the other hand I will stick with my bank who offers all those same services free.
This is happening at an amazing pace, and Walmart will eventually control many financial services, which does not bode well for the local banks and credit unions. Technology has allowed Walmart to bypass the stringent banking laws while still becoming a huge player in the credit and debit card business. There is no stopping them from gaining the lion’s share of anything they choose to pursue.
This financial services/bank program fits in well with the Walmart concept. Sam’s Club offers services in non-traditional channels, such as eye exams, auto services and more. It makes sense for them to expand their model to include financial services. There are few retailers that can pull this off. Walmart can. I’m not sure if the “nation” would benefit, but it sounds like Walmart is offering a service that their customers might appreciate. In the end, it will be the customer who decides if Walmart made the right decision.
So where does this put the Amex BlueBird/Walmart alliance?
Like some many other things, technology is changing our living standards. What Walmart is offering is the opportunity for lower-income individuals to also do away with the use of cash and checks as most of us are experiencing already. Quite frankly, banking as we know it is going the way of so many other businesses that had direct customer contact, and it is not going to be surprising to see branch banking become only an internet process over the next five to 10 years.
I think this is going to become very popular at Walmart and they are going to greatly benefit from this new program. We are going to see a lot of other major-type companies follow in their path. Banks for centuries have controlled our financial well-being at a high cost. That is coming to an end.
Banks cost a lot of money and these expenses are impacting retailers and the consumer almost as much as the outrageous amount of taxes we pay for service and little or no protection from governments around the world.
The bad news is that more and more retailers are finding they can do without them—the banks that is. The trick in this endeavor is to acquire enough expertise so as to launch with sure positive results. The legal system in the U.S. is difficult to work with in framing a market plan that can bring minimal services with safe investment plans. The laws governing restraint of trade and monopoly protection can also be an obstacle to legitimate market evolution and corporate growth into the new world market. A lot of companies are leaving the U.S. for this reason as well as the tax burdens. The single largest threat to the economy of the U.S. is an open world economy where we must compete with unbridled commerce laws within the third-world emerging economies.
These governments and the businesses that support them are simply not interested in what we think is fair and free trade. Large companies like Walmart are aware of this and are willing to push for their needs to grow the business. Creating banking services is a must for their global market proliferation so it will be done, if not by them then by the new retail business giants.