Retail giant Wal-Mart Stores Inc. plans to extend its financial services operation in U.S.-based stores.
The discount retailer expects to have as many as 1,000 Wal-Mart MoneyCenters by the end of next year, and will also debut a prepaid MoneyCard.
The broad financial offerings are largely intended for low-income and underserved consumers.
"Wal-Mart MoneyCenters will assist customers who are outside mainstream banking with convenient, nationwide access to low-cost money services, including check cashing, money orders, bill payment and money transfers," according to a statement from the retailer.
Bentonville, Ark.-based Wal-Mart is a $288 billion general merchandiser. Its pledge of everyday low prices drives more than 125 million customers to its U.S. stores per week.
The MoneyCard is a prepaid Visa card that can be used anywhere Visa is accepted. It will be issued in partnership with GE Money Bank and Green Dot, which provides prepaid cards to retailers.
Consumers will be able to reload the cards, and all funds are backed by the Federal Deposit Insurance Corporation.
At the time of purchase, consumers receive a temporary Visa card that can be used immediately after activation. A personalized card is mailed to them seven to 10 days later.
"As we piloted the card ... acceptance has been exciting to watch because it means we've met a real need for our customers," said Jane Thompson, president of Wal-Mart's financial services.
There is a one-time charge of $8.94 to obtain a Wal-Mart MoneyCard, and a monthly maintenance fee of $4.94 to keep the card active. Consumers can avoid the fee, however, if they load $1,000 or more on the card within a calendar month.
The MoneyCard will be in about 1,300 Wal-Mart stores by the end of June, and in another 1,300 stores by the end of July. It will be available at most of Wal-Mart's 4,068 stores by the end of the year.
Banking and monetary policy expert Bert Ely said Wal-Mart's financial services are aimed primarily at its lower income customers.
"They're going after folks that don't have bank accounts, that now use some very expensive services, for instance, for cashing checks or for sending money to the family back home in another country," said Ely.
Right now Wal-Mart operates 225 MoneyCenters. It expects to double them to 450 by the end of 2007.
Ely said Wal-Mart's move will be in direct competition with check cashing stores.
For instance, the $4.64 fee to reload the card with less than $1,000 is waived if consumers load funds directly on the MoneyCard from a check cashing transaction at Wal-Mart, or if they have funds loaded via direct deposit.
Also, consumers can withdraw cash at no additional charge when making a purchase.
The move comes just three months after Wal-Mart withdrew its application to form an Industrial Loan Company (ILC), which would let a commercial firm offer banking services even though the commercial entity is not regulated by a federal banking agency.
Wal-Mart filed the application in 2005, saying it wanted to process its own check and credit- and debit-card transactions in order to save millions paid to third-party processors. But opponents believed it was the first step toward setting up a national network that would challenge community banks.
The general merchandiser's fiercest competitor, Target, operates an ILC.
Target has 1,500 stores compard with Wal-Mart's 4,068 U.S. stores, including the Wal-Mart discount chain and Supercenters, the warehouse chain Sam's Club, and grocery chain Neighborhood Markets.
Written by Lorrie Grant with reporting from NPR's Jack Speer.