Banks become Wal-Mart's new biggest enemy

Financial institutions ask the Fed to regulate the discount retailer, saying its prepaid cards subvert the swipe-fee limits the chain fought for.

By Jason Notte May 8, 2013 1:00PM
Wal-Mart store in Secaucus, New Jersey / Jin Lee/Bloomberg via Getty ImagesHow do you get labor unions and banks on the same side? Just mention Wal-Mart (WMT).

Unions have been hammering away at the nonunion discount mega-chain over worker compensation, hours, its stance on minimum wage increases and hiring practices for much of the past year. Yet it's Wal-Mart's "backdoor" foray into the banking industry and its sales of prepaid cards that brought banks into the battle against the retailer.

The Federal Advisory Council, a group of banks including PNC Financial Services Group (PNC) and BB&T (BBT), told the Federal Reserve at a meeting in December that Wal-Mart's sales of prepaid cards warranted greater federal oversight, according to meeting minutes obtained by Bloomberg and cited in a story published Wednesday.

The council urged the Fed to consider limiting payment-related services like prepaid cards to "regulated banking institutions" or to step up regulation of that business. It also suggested the government unleash the Consumer Financial Protection Bureau, created by the 2010 Dodd-Frank law, on nonbank companies like Wal-Mart that provide financial services.

Banks are becoming a fairly regular opponent of Wal-Mart and haven't been shy about teaming up with some of the chain's other enemies to block expansion onto their turf. In 2005, banks joined labor unions and community groups to oppose Wal-Mart's application to open a limited-service bank based in Utah. The retailer eventually abandoned that plan.

In 2011, banks asked the consumer bureau to consider Wal-Mart as a "larger participant" in financial services, which would lead to direct oversight.

As if to taunt the banks, Wal-Mart immediately followed up the council's request by partnering with American Express (AXP) and offering a prepaid card called Bluebird. While similar to a card offered by JPMorgan Chase (JPM), Bluebird raised eyebrows among banks by detaching itself from banks entirely. Wal-Mart says its partners like American Express are already regulated, but the banks aren't having any of it.

The strongest argument the banks make is that Wal-Mart's plan is just a big ploy to get around interchange, or card swipe, fees by hoarding all the fee money for itself. In 2010 and 2011, retailers including Wal-Mart, Target (TGT) and Home Depot (HD) successfully fought the banks to get the Fed to mandate limits on swipe fees.

Prepaid cards, however, are exempt from those limits. The banks argue that the exemption "appears to permit Wal-Mart, a strong proponent of lower debit interchange rates, to benefit indirectly from the very thing it opposed: unregulated interchange."

With customers knocking Wal-Mart in increasing numbers for its empty shelves and long checkout lines, the retailer's banking strategy is attracting more enemies than business.

More on moneyNOW

May 8, 2013 2:00PM
To sum this up:  Banks have been making huge profits on credit/debit card fees, which is nearly a monopoly as there are only Visa and Mastercard.  Most consumers are too dumb to realize that all of these fees are costing them money (every time you swipe a card you are making a donation to your favorite big-bank).

Now, Walmart is trying to give the banks some real competition on their near-monopoly profit center, and the banks are mad.  I support Walmart 100% on this (and I'm not a big Walmart fan)

Keeping the banks in check regarding their interchange fees is long overdue.  These fees have been a leech on our economy for too long.
May 8, 2013 1:39PM
The big banks have been gouging people from their money for years.I would like to see Walmart put A hurting on em.
May 8, 2013 1:44PM
Banks are just taking a cheap shot, because banks suck, if the consumer wants to load their money onto a prepaid card that isn't backed by the fdic then let them! Just because they aren't using the banks becaue of their outrageous fees, and claim walmart to be collecting the "fees" themselves, must have never reead the agreement which states there aren't any fees.
May 8, 2013 1:55PM
bottom line money money money. greed greed greed
May 8, 2013 2:48PM
With any luck Wal-Mart and the Big Banks will kill each other off.
May 8, 2013 2:39PM
Walmart vs. The Banking industry... Who do you cheer for in this match up of disgusting entities?
May 8, 2013 2:32PM
The banks strongest argument is that Walmart is cutting out the middle man on the transactions?  How is that any kind of legal argument at all.  No there strongest argument is that the banks own the fed.  Walmart is smart to cut out the middle man, especially one who really doesn't do anything.
May 8, 2013 2:07PM
I know most of you won't believe this but it's true.  I make six figures a year and only use Walmart for my banking.  I will have them cash a check for $2500, and keep $500 cash then deposit the rest into their prepaid card and it costs me $5.00.

I then move my money around online and pay my bills with the card but I would rather put my money into a scottstrade account and earn a little interest rather than the bank earning money from me, then charging me up the buy in little fees! 

Screw all Banks!
May 8, 2013 3:00PM
The prepaid walmart money cards, debt collectors can't go after them because they are not tied to any bank account. That is a plus on walmarts part. Banks stesal from us all with the help of our very own federal government. But as others have posted, walmart is their own worst enemy. Busy day, people waiting to check out, 25 checkout lanes and only 4 open while the store manager walks around with his thumb up his butt. 
May 8, 2013 2:40PM
A bunch of rich greedy a-holes arguing with another bunch of rich greedy a-holes.  After the dust clears (and the lawyers get their cut) it's the consumer who gets screwed, no matter what the outcome.  Pardon me for not caring which bunch of rich greedy a-holes comes out on top on this.
May 8, 2013 2:17PM
Once again proof of the banking cabal and their thievery to use the Police powers of government to do their dirty deeds and force people to pay their fees and sur-charges. In a real free market such practices by these banking institutions would be illegal. Instead we live in Bizarro world where these corrupt tyrannical institutions are condoned to pillage and plunder through laws, they have created crony capitalist cartels. The Fed is the king pin cartel. Their days are numbered and they don't even know it. self implosion is right around the corner. One day the government too will crash and have no money to bail these filthy dirty low life scum bags anymore.

“When plunder becomes a way of life for a group of men living together in society, they create for themselves, in the course of time, a legal system that authorizes it and a moral code that glorifies it.” – Frédéric Bastiat,"The Law"1850

May 8, 2013 3:04PM
This is like the kettle calling the pot black. Banks and wally world are both thieves. It just pisses the banks off because wally world found a way in. Nothing makes a thief madder than to have something stolen from him.
May 8, 2013 2:35PM

I am not a Wal-Mart customer.


However big banks have not proved to be good custodian or good steward of customers money or customers interest or interest of the People of United states.


If Wal-Mart s a vulture, banks are also one. Swipe fees are manipulated and abused by Interbank organizations and banks. particularly their charge backs when they take no responsibility for transaction they approve. Banks operate on a base heads we win and tail you lose.

May 8, 2013 3:13PM
Stay the heck out of Walmart's business. I have a Walmart money card and use it for a lot of things. They don't rob me blind like the banks do.
May 8, 2013 3:04PM
Sounds like the banks want a piece of the action and are acting like a bunch of babies.  I am glad to hear that Walmart is getting to them.
May 8, 2013 2:47PM
Ha, ha, ha to the big banks. But soon Walmart will be too big to fail. I sure hope the taxpayers won't have to ever bail them out.
May 8, 2013 2:22PM

Just remember that the Federal Reserve System was created by a congressional act. The "Federal Reserve" is a Board, Committee and 12 Regional Banks representing whom.... wait for it, yes that

is right ... Other Private / member BANKS!!!

The FR was created to control monetary policy in order to avoid panics.

May 8, 2013 1:50PM

Walmart and banks are both thieves, also the prepaid cards are a scam.

Getting the public that falls for prepaid cards for it to advance money to retailers and credit card companies for no advantage in return.

It is worse than a mafia organization.


May 8, 2013 3:31PM

Let's break this down:

- I pay Walmart (buy a card) $20

- No additional fees are charged, because Walmart is using Walmart's servers and network to deduct from the rolling balance

- My parents must use the card in another Walmart


- I pay American Express (again buy a card) $20

- AmEx charges 4% to Walmart to use Walmart's system to connect to them to have them manage the rolling balance

- My parents can use the card in another store, other than Walmart

- The second store more than likely pays another 4% of the total to AmEx when the card is used.


The banks can suck it.  Their cards are usable anywhere, and Walmart's is not.  I remember the last time I tried to cash a paycheck at Bank of America (it was drawn from a Bank of America account).  They were going to charge me $5 to honor a check drawn from their own accounts, and they had the security guard usher me out the door when I told them I had a problem with that.  This is essentially what they want Walmart to do; charge you for drawing on your own money so they can continue to 'compete'.


Walmart is no saint, but the banks are simply dirty.

Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

Trending NOW

What’s this?


[BRIEFING.COM] The stock market finished an upbeat week on a mixed note. The S&P 500 shed less than a point, ending the week higher by 1.3%, while the Dow Jones Industrial Average (+0.1%) cemented a 1.7% advance for the week. High-beta names underperformed, which weighed on the Nasdaq Composite (-0.3%) and the Russell 2000 (-1.3%).

Equity indices displayed strength in the early going with the S&P 500 tagging the 2,019 level during the opening 30 minutes of the action. However, ... More