WSJ on Wal-Mart smart cards.
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Wal-Mart Expands Financial Services,
Plans to Sell Debit Card From Visa
By MIKE BARRIS
June 20, 2007 9:01 a.m.
Wal-Mart Stores Inc. announced a broader push into financial services, saying it will open 1,000 Wal-Mart MoneyCenters by the end of 2008, and begin selling a Visa debit card under its own name.
Wal-Mart now operates MoneyCenters at 225 of its 4,000 U.S. stores. The centers offer customers low-cost money services, including check cashing, money orders, bill payment and money transfers. The number now will double to 450 by the end of this year and then more than double again to 1,000 by the end of 2008, Wal-Mart said.
"Many of our customers are paying too much, traveling too far and not being well served," Wal-Mart Financial Services President Jane Thompson said. "But they still need to pay their bills, cash their checks and transfer money. We're offering them a safe place and a card to help them manage their money. We've seen firsthand what a difference that can make. It changes lives."
The focus on check cashing, bill payment and other nonbanking services is key for the Bentonville, Ark., retailer as it attempts to find ways to bolster its sales expansion amid a pullback in its construction of new U.S. stores. State-and-federal regulators have stymied Wal-Mart's attempts to get into banking. In March, Wal-Mart dropped its pursuit of a charter to operate an industrial-loan company, a form of bank, due to intense opposition and a federal moratorium on reviewing such applications.
Wal-Mart then pledged to increase its sales by further pursuing nonbanking services.
Currently, Wal-Mart conducts more than two million money services transactions a week, it said. Last year, customers who used Wal-Mart's services saved an average of $450 a year, or nearly $40 per month, the company said. The opening of additional Wal-Mart MoneyCenters will put more than $320 million back into customers' pockets, the retailer said.
Wal-Mart caters heavily to customers with little or no access to banking services, often described as the "unbanked" or "underbanked." Thompson has said roughly 20% of the U.S. population fits that description, and that segment is well represented within Wal-Mart's customer base. According to ACNielsen, 42% of Wal-Mart shoppers have household incomes of less than $40,000.
That makes Wal-Mart a destination for check cashing, bill payment and money transfers. Last year, it handled an average of 1.5 million to two million such transactions each week. Among the buyers are immigrants sending money to their families abroad.
The Wal-Mart MoneyCard will be rolled out to about 1,300 Wal-Mart stores by the end of June and to another 1,300 stores by the end of July. The reloadable prepaid card will be available at most Wal-Mart stores by year end, the retailer said.
Customers will be able to use the Wal-Mart MoneyCard to shop online, buy gasoline, get cash from an ATM, and use it where Visa cards are accepted.
Retailers including CVS Inc., RadioShack Corp., RiteAid and Walgreen sell similar Visa debit cards. Wal-Mart will use a subsidiary of General Electric Corp. for the card's services. It has a long history with GE's consumer-finance group, launching a Wal-Mart Discover Card issued by GE two years ago. Last year, GE and Wal-Mart released a co-branded credit card in China. |
