Walmart has announced its next major foray into retailbanking with a partnership with Green Dot’s GoBank (after the American ExpressBluebird relationship established two years ago). Plans call for the introduction of afull-service checking account that expands Walmart into another area ofeveryday banking services and provides Green Dot with a major expansion of itsweb bank. Walmart expects to belaunching the checking account nationwide in late October.
Walmart describes it services as a low-cost version of atraditional checking account. There willbe low monthly fees for the account, with no fee for overdrafts or bouncedchecks and no minimum account balance. The account will carry an $8.95 fee permonth if the total direct deposits into the account are less than$500/month. Almost anyone can qualifyfor a checking account, with Walmart and GoBank using a proprietary vettingsystem. Passing a simple identificationcheck is the major hurdle to opening up this account.
Recently, Walmart has been losing customers to otherlower-price retailers such as T.J. Maxx, Dollar Tree or Family Dollar. This kind of effort might entice customers toreturn to the fold.
“Their core consumer, the lower-end consumer, isfaring disproportionately poorly in the overall economy,” said Faye Landes,retail analyst at Cowen, an investment management group. “So anything they cando to get them back from the dollar stores and back in their own stores makestotal sense.”
Walmart has been trying to open a bank since 2007, but hasbeen continually opposed by the banking industry. Partnerships such as this one and the priorAmerican Express Bluebird prepaid card are solid efforts to provide necessaryservices to their core customer base. This gives their customers another reason to return to the franchise, tobuy more services from Walmart and to expand Walmart’s reach into everydayneeds of their customers. It also doesn’t hurt to provide them with the paymentability to shop more at Walmart!
Overview by Ron Mazursky, Director of the Debit Advisory Service for Mercator Advisory Group
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