Walmart's MoneyCenters and Other Financial Services

bank teller talking to customer
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Walmart, the biggest retailer in the world, has made a major move into financial services. Some key ventures include:

  • MoneyCenter has expanded beyond the brick-and-mortar experience and offers online financial services
  • Partnered with AMEX Bluebird to provide basic, digital banking
  • Sam's Club stores offer a $30 statement credit to new business credit card accounts
  • Plus, there is a major push for a Walmart Rewards MasterCard in Canada

These are variations on two longstanding themes. First, supermarkets have a long history of having existing banks, mainly small local savings banks and thrifts, rent space within their premises for small branches catering to shoppers, usually with extended hours versus those in the typical branch.

Meanwhile, Walmart happens to be a major landlord for offices of national tax preparation firm Jackson Hewitt. Second, in various other national markets (notably the United Kingdom), large supermarket chains such as Tesco have a history of setting up banking subsidiaries of their own to operate on their retail premises.

The 2009 Economist Special Report on International Banking noted that supermarkets tend to be much more serious about delivering excellent customer service than banks, which are more obvious in subordinating service to profit. They also point out that supermarkets have a competitive advantage in their low cost of customer acquisition, due to a large number of shoppers that they already serve daily.

Walmart MoneyCenters offer these core services:

  • Check cashing
  • Money transfers
  • Money orders
  • Bill payment
  • Prepaid debit cards
  • Credit cards
  • Check printing (online orders only)

Check Cashing Fees

Walmart is looking to serve lower-income individuals who do not have banking relationships. Walmart MoneyCenters charge a flat $4.00 to cash any checks worth $1,000 or less, and a flat $8.00 for checks above $1,000, to a maximum of $5,000.

The Unbanked Market

The market potential for Walmart is large since the FDIC estimates that about 7.1 million U.S. households, or 5.4% of the total, are unbanked (i.e., with no bank accounts or banking relationships).

Green Dot Stake

Walmart also has a small equity stake of about 1% in Green Dot, a payments processor that supports the prepaid and reloadable Walmart MoneyCards, an alternative for low-income customers who do not have bank accounts. Meanwhile, Green Dot has acquired Bonneville Bank, a small commercial bank in Utah. While this might provide a means for Walmart to add full banking services in the U.S., the company stopped pursuing a banking license in 2007, after facing strong opposition from political opponents and banks fearing competition. Lobbyists for the banking industry are arguing that Walmart MoneyCenters should be regulated by the Consumer Financial Protection Bureau created by the Dodd-Frank bill (also in Bloomberg Businessweek, August 15, 2011).

Small Business Loans

Members of Walmart's Sam's Club stores can obtain small business and start-up business loans of $5,000 to $25,000 through an online application process with discounted fees. Superior Financial Group, an independent issuer Small Business Administration (SBA) insured loans, is the issuer of these loans, not Walmart. Walmart launched the program in 2010, in response to a 2009 survey in which 15% of Sam's Club business members indicated that they had been denied credit.

Walmart or Wal-Mart

The parent corporation is still legally the hyphenated Wal-Mart Stores, Inc. However, the current corporate logo and trademark is a single word without punctuation, Walmart. Some publications, like The Wall Street Journal and Bloomberg Businessweek, use Wal-Mart. Others, like the Financial Times, follow the lead of the company's own website, which uses Walmart, as does the new signage on U.S. stores. Adding to the confusion, many of the company's trucks still bear the hyphenated Wal-Mart name.