Shake-up in money transfer business looms with Wal-Mart's new service
Wal-Mart is delving deeper into financial services at its stores and shaking up the money transfer business.
The world's largest retailer introduced a new money transfer service that it says will cut fees for low-income customers by up to 50 per cent compared with similar services elsewhere. The Walmart-2-Walmart service is being rolled out in partnership with Ria Money Transfer, a subsidiary of Euronet Worldwide.
The service, which will be available from April 24, allows customers to transfer up to US$900 to and from more than 4,000 Wal-Mart stores in the United States. The move could reshape that industry and is likely to set off a pricing battle.
Customers can transfer up to US$50 for a US$4.50 service fee and up to US$900 for US$9.50.
Comparable services elsewhere cost up to US$70 when transferring less than US$1,000, Wal-Mart said. Western Union's website puts the price of transferring US$900 in New York at between US$20, if using a bank account, and US$85, if using a credit or debit card.
Wal-Mart's announcement is the latest way it is acting more like a bank. About a decade ago, the retailer applied unsuccessfully for an industrial bank charter. Those efforts were blocked even though it vowed it would not open retail branches but wanted to use its bank to process card transactions. In 2007, it abandoned those plans, but it has been creating an expanding menu of financial offerings for customers, aimed particularly at those with limited access to banks. The company already offers prepaid cards, cheque cashing services and tax preparation services.
The retailer is aggressively trying to increase foot traffic in its stores after seeing comparable-store sales decline for four consecutive quarters. The Walmart-2-Walmart service may help stem that trend, giving customers just one more reason to spend more time inside Wal-Mart.
Daniel Eckert, Wal-Mart's senior vice-president of services, said the move into the money transfer business gained momentum after complaints from customers about high fees elsewhere. He acknowledged the programme could bring more customers into stores, but he insisted the goal was to offer shoppers more financial choices.
"Walmart-2-Walmart brings new competition and transparent, everyday low prices to a market that has become complicated and costly for our customers," Eckert said.
According to a 2011 study conducted by the Federal Deposit Insurance Corp, 29 per cent of American households do not have a savings account, while about 10 per cent do not have a cheque account.