Wal-Mart reaches out to the unbanked

The retail giant could give banks a run for their money.

By Jonathan Berr Oct 8, 2012 11:46AM
Wal-Mart store in Secaucus, New Jersey, Jin Lee, Bloomberg via Getty ImagesWal-Mart (WMT ), the world's largest retailer, and American Express (AXP) announced plans Tuesday to offer alternatives to conventional bank accounts, whose escalating fees are souring increasing numbers of Americans on the financial services industry.  

Customers of the new Bluebird service will be able to use many of the same features as conventional bank account holders, such as withdrawing cash from ATMs, paying bills electronically and making deposits via smartphone. But they won't need to meet a minimum balance or pay monthly, annual or overdraft fees. Bluebird, which began as a pilot last year, is set to launch next week.

The service is Wal-Mart's latest foray into financial services for the so-called unbanked or underbanked. Wal-Mart has financial services locations, called MoneyCenters, in more than 1,000 stores that offer electronic bill paying, check cashing and tax-preparation services. 

The financial services industry has bitterly fought Wal-Mart's attempts in recent years to get a banking license. Whether Bluebird will restart that battle remains to be seen. The service, though, may prompt banks to pay attention to customers who often get bad bank service or none at all.

"Anything that provides clear, transparent pricing for financial services is a good thing," Ellen Schlomer, the executive vice president of the Committee for Responsible Lending, said in an interview, adding that she hasn't had time to study Bluebird in depth.

Shares of Wal-Mart have gained about 26% this year. The company's motives for bolstering its financial services offerings are not altruistic. In theory, if Wal-Mart can make it easier for consumers to manage their money, they will spend more at the retailer. The timing of the announcement, at the start of the holiday shopping season, is no coincidence. Wal-Mart already has slashed fees for its layaway plans. Bluebird, though, will help the retailer all year round.

According to the FDIC, about 10 million U.S. households are unbanked and 24 million are underbanked. Wal-Mart also can afford to treat banking consumers better than traditional rivals because it is not dependent on fees for its bottom line. That is good news for consumers.

High fees are souring many consumers on traditional banks. Data cited by Wal-Mart show that consumers now pay an average of $259 per year for a basic checking account. CRL estimates that the industry earns $25 billion from overdraft fees. Consumers are paying more fees because of changes in banking practices, which include tactics like deducting the largest payments from accounts first, according to Schlomer.

Jonathan Berr is long Wal-Mart. Follow him on Twitter@jdberr.

Oct 8, 2012 5:51PM

Wal-mart taking over.. i like this. ...Wal-mart building community grocery store betwen there mega store. more jobs without benefits.


They crushing the competition


They better learn to compete

Oct 8, 2012 5:46PM
well..welcome again China..you and our Commander in Chief are taking over our lives..or the lives of out citizens that want a better life..I dont know any Chineese words..guess I am gonna have to use Bing translator!!  WTF!!
Oct 8, 2012 5:42PM
Looks like Wal Mart is going to be BIG BROTHER soon maybe even president of the world
Oct 8, 2012 5:41PM
@Janet52 - Really?  You're worried about MItt bailing someone out?  After all the bailouts and ill-advised spending that Hussein Obama has put in place over the past four years?  He increased the national debt by almost 50% in just four years!

Oct 8, 2012 5:41PM
Thats right banks, You can kiss my a.s.s when I leave you
Oct 8, 2012 5:38PM

I will look into it.   My bank kills me with fees.   I agree overdraft should have a penalty but banks pay is little to NO interest even if you have a considerable amount in the bank that you do not touch.


They are now making their living off fees instead of loaning money to business.

Oct 8, 2012 5:33PM
does anyone know if this new launch will help some  people in "checks system ?"...if so i'm on board and power to the "powerless !"
Oct 8, 2012 5:31PM
Meet the new boss. Same as the old boss.
Oct 8, 2012 5:29PM
YIPPIA...................I hope it goes over big. With all that American taxpayers have done for that industry they continue, the greedy bastards continue to look for new ways to rip us off.
Oct 8, 2012 5:26PM
Her's an idea, don't overdraw your account then there will not be overdraft fees. Simple. If you are aware of your spending, you will know if you are about to go over your account balance. This isn't rocket science. You cannot expect to go over your balance and not have to pay a fee for it. You are in fact borrowing the banks money and they are entitled to a fee for you borrowing it. No different than you loaning the bank your money, you expect interest on that money.
Oct 8, 2012 5:22PM
Sounds like a good alternative to the greedy major banks. Tired of getting stuck with fees that don't make any sense or are applied to their advantage.
Oct 8, 2012 5:19PM
Not even if God tapped me on the shoulder and told me to bank  with wall mart.  Keep your noise out of our business !!
Oct 8, 2012 5:15PM
Oct 8, 2012 5:15PM

"According to the FDIC, about 10 million U.S. households are unbanked and 24 million are underbanked."
And they are all Walmart regulars.
Oct 8, 2012 5:02PM

I love Wal-mart.  I just had my oil change and they inspected my car. They found out that i needed a new battery, they saved me a tow job.


I can't wait till they start selling new cars, like the $6000.00 ones from China, and buy it online and delivered to my local Store.


I will able to buy  food, automobile, deposit my money in my Wal-Mart bank account, a gun, candy bars and plants for my Garden.


All i need now is a Hospital in Wal-Mart , maybe they can cure my Mental Illness i get every time i go in the store.



Oct 8, 2012 5:02PM
Another move by a bully corporation to kill local businesses and replace them with poor service and low quality.
Oct 8, 2012 4:58PM
It's a great move for the company.  If they don't make billions off the poor slobs who shop there, MittWitt will bail theim out (if God forbid he is able to cheat his way to a win on Nov. 6th).
Oct 8, 2012 4:57PM

More over banks a service that will help the finacially challenged has stepped in to aid those people whom you have overlooked for decades.........and now you want their business! Too bad you didn't want it before. Walmart actually cashes my salary without a hassle when the bank it is drawn on give me hassle everytime because I am not a signer on the account..........I have a financial director for that.

My bank is 45 minutes away, Our company bank is 12 minutes away, and Walmart is 2 minutes away.Thank you Walmart for your money centers!!!!!

Oct 8, 2012 4:54PM
That's what we need, Obama and WalMart running the country.
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