The Green Sheet Online Edition
June 6, 2007 • 07:06:02
Wal-Mart banks on the underbanked
Federal regulators recently slapped down Wal-Mart Stores Inc.'s efforts to obtain an industrial loan charter, which would have given the retailing giant authority to perform certain banking functions. Now the company is ramping up a new card product aimed at the millions of Americans who prefer not to put their money in banks.
According to media reports in early June, the new Wal-Mart MoneyCard is being issued through GE Money Bank, General Electric Co.'s consumer finance unit.
Monrovia, Calif.-based Green Dot Corp., which sells prepaid cards and top-ups (or reloads) through retailers nationwide, is providing reloading services for the MoneyCard.
A spokeswoman for Wal-Mart declined to provide details, although she said the company would have something to say about a new card product "in a couple of weeks."
The MoneyCard Web site describes the new product as a next generation Wal-Mart Prepaid Visa Card: "You can continue using your existing Wal-Mart Prepaid Visa Card. Any new benefits that we introduce are for both the Wal-Mart MoneyCard and the Wal-Mart Prepaid Visa Card."
Wal-Mart has made no secret of its efforts to enter the financial services arena, with an eye toward attracting the estimated 73 million American adults who are considered "unbanked" or "underbanked."
Wal-Mart's MoneyCard carries a one-time activation fee of $8.94 and a reload fee of $4.64. But the reload fee is waived for customers who add funds to their cards through direct deposit or by cashing payroll or government checks.
Wal-Mart also charges a monthly account maintenance fee but waives that fee for those customers who add at least $1,000 to their cards during the preceding month.
There are fees for ATM transactions; however, POS transactions are free, according to the cardholder agreement published on the MoneyCard Web site.
Prepaid cards are a burgeoning market. The consultancy Mercator Advisory Group has estimated that consumer spending using prepaid cards will top $236 billion by 2009, up from $165 billion in 2005.
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