Wal-Mart's March into Financial Services Unsettling to Some

by Mark Friedman  on Monday, May. 12, 2014 12:00 am  

Wal-Mart’s latest expansion into the financial services sector includes offering customers money transfers and the ability to shop for auto insurance.

Eckert said the card was designed to serve the “unhappily banked segment.”

Bluebird now has more than 1 million accounts and more than $2 billion has been added to the cards, he said.

American Express also said it is pleased with the service. “Ninety percent of Bluebird customers are new to American Express and nearly half of them are under the age of 35,” Alpesh Chokshi, president of International Payment Options for American Express, said in an email statement to Arkansas Business. “This shows us that we’re truly opening up the American Express brand to the millions of Americans who increasingly feel they aren’t getting the value they expect and deserve from traditional financial services companies because of high fees.”

Chokshi also said American Express has found that customers are using their Bluebird cards to pay bills such as rent and medical bills.

“This makes us very optimistic about the long-term potential of Bluebird as a true alternative to debit and checking,” he said.

Protests Quell Effort

Wal-Mart wanted to get into the banking industry in 2005. It applied for a specific type of limited state bank charter in Utah and said it planned to handle electronic payment processing.

“We have stated several times publicly in oral and written testimony, our business plan does not include branch banking,” Wal-Mart Financial Services President Jane Thompson said in a statement to the Federal Deposit Insurance Corp. in October 2006.

But by March 2007, the protests from the banking industry were too much. Wal-Mart withdrew its application for the industrial loan company charter.

“Unlike dozens of prior ILC applications, Wal-Mart’s has been surrounded by manufactured controversy since it was submitted nearly two years ago,” Thompson said in a news release. “At no stage did we intend to use the ILC to establish branch banking operations as critics have suggested — we simply sought to reduce credit and debit card transaction costs.”

While withdrawing the Utah charter application, Thompson said Wal-Mart planned to offer new financial services — and it followed through. About three months later, Wal-Mart announced it was adding 1,000 Money Centers in its U.S. stores. At the time it ran 225 Money Centers that offered services such as check cashing, money orders, bill payment and money transfers.

It also unveiled a prepaid “MoneyCard” through a partnership with GE Money of Fairfield, Connecticut, and Green Dot Corp. of Monrovia, California. The card was aimed a Wal-Mart customers who don’t have bank accounts or have limited access to banking services.



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