Wal-Mart Offers Checking and Debit Service in the U.S./Banco de Wal-Mart in Mexico

For years, Walmart, the world’s largest retailer, unsuccessfully attempted to acquire a bank charter in the U.S., which would enable it to offer banking services to its enormous customer base (Walmart has a bank charter for its stores in Mexico and a charter in Canada, but not in America).

While Walmart cannot operate as a bank in the U.S., it can enable banking firms to offer their products in Walmart stores. Green Dot Corp., an FDIC member bank, offers checking accounts in Walmarts to anyone over 18 years of age who meets the requirements of an identification check. These GoBank checking accounts charge a modest monthly fee for accounts with direct deposits of less than $500 per month.

Walmart’s first foray into offering financial services in the U.S. was its in-store “Money Services,” with services including check cashing, money transfer and bill payment, as well as issuing prepaid Visa debit cards for a small fee to its American customers. Walmart also offers Bluebird, a checking and debit service, through a joint project with American Express. Bluebird competes head-on with traditional banks by offering bank-like services on a user-friendly basis. The product is intended to help consumers avoid the ever-increasing variety and cost of fees charged by banks for traditional checking accounts. Consumers can set up a Bluebird account for free online, or for a small fee at a Walmart store. In return, they receive the Bluebird card with no annual fee. The card offers American Express Purchase Protection, Roadside Assistance and fraud protection. Consumers may load the card with money via a wide range of methods, including direct deposit, in-person cash deposits at Walmart stores and the deposit of checks via a mobile app. They can withdraw cash at no fee via MoneyPass ATMs. Customers also can set up electronic bill paying at no charge, and the service offers check-writing capabilities. On smartphones, with an app, users can make person-to-person payments. This is a dramatic and innovative product offering with two of the most trusted names in the world of business behind it. The service has the potential to gain wide acceptance among consumers who do not need traditional banks and are frustrated by banks’ fees. Walmart’s strategy of taking the bank to where the customer shops is highly successful in Walmart’s stores Mexico and neighboring Latin American countries.

Walmart recently hired new executives who are very experienced in consumer online banking products. These hires illustrate the company’s push to diversify its profit base, which includes reaching out to the unbanked consumers and those who don’t have access to credit.

Walmart’s millions of customers will be targets for a wide range of Walmart’s own financial services, which will be offered under the brand “One.” In late 2021, the firm expanded such services through a new partnership with InComm Payments (operator of the VanillaDirect payments network). This enhances Walmart customers’ ability to make everyday payments in-store, such as utility, telephone and insurance bills. Customers can use cash for these payments if desired, and transfer cash to a variety of outside financial accounts. Financial services offer multiple routes to growth for Walmart, including: 1) a reason for customers to return to stores more often, 2) a new way to earn transaction fees, 3) increased customer loyalty and 4) an ability for Walmart to enhance its competitive position against firms such as Target and Amazon.

“One” will initially focus on deposit accounts with debit cards, with no monthly fees and $200 in overdraft protection at no cost. This positioning is likely to be of great appeal to the non-banked and underbanked, as such consumers consistently state that they feel they do not have enough money to meet deposit minimums at traditional banks. Eventually, One is likely to offer a wide range of services, from investments to loans. Walmart is partnering with Coastal Community Bank in order to offer FDIC insured deposit accounts.

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