A month ago, Wal-Mart announced that it was finally entering the financial services business. I say, finally, because an unlikely group of anti-Wal-Mart collaborators … big banks threatened by Wal-Mart’s commitment to low-cost financial services and the traditional anti-Wal-Mart folks (populist politicians, union organizers and a range of other interests) … had successfully blocked Wal-Mart from getting a federal banking license.
What is puzzling to me is why so many people are against more financial services for the working underclass/poor from the company which has brought them non-fee ATM access and the lowest cost option for check cashing. Wal-Mart claims that that users of their current financial services save on average $450/year or about $40/month. That’s not chump change and reduces the poverty tax!
OK, so how did Wal-Mart get around this obstacle? They chose to partner with GE Money and Visa to offer a debit card … or what they call a MoneyCard. You don’t need to setup a bank account, nor do you require a credit check. Customers will be able to directly deposit checks onto their card, check balances online and get balance updates over their cellphone. In many cases, customers can greatly reduce and even eliminate check-cashing and other bank fees they would otherwise incur. Sounds pretty good to me. [Yes, there are fees which some critics have argued should be lower.]
Why does this matter? Wal-Mart reports that 20% of its customers (about 27 million people) don’t have bank accounts. The MoneyCard and associated financial services provided by Wal-Mart enables these customers to have a virtual bank account with the convenience of both in-store Wal-Mart service hours (better than most banks) plus convenience of a standardized payment/cash card. I wouldn’t be surprised if a large number of their customers who have bank accounts will move over to the MoneyCard as their preferred “bank account”.
Please understand … I don’t think everything that Wal-Mart does is right. I think the issue of health insurance benefits for workers is a tough issue that we need to figure out on a state or federal level. Their record of dealing with some of their vendors also has some major issues. What I am calling for though is to give credit where credit is due. Wal-Mart has a strong track record of delivering value to their customers who are predominantly the working lower-income population. Let’s get behind company initiatives which provide beneficial services like this.
Your thoughts on this? Post a comment.