By Patti Murphy
ProScribes Inc.
Editor's Note: "Wal-Mart wants to bank the underserved" were published by InsideMicrofinance.com June 15 and 20, 2011, respectively; reprinted with permission. © 2011 InsideMicrofinance.com. All rights reserved.
Just a few years ago, Wal-Mart, the mega-retailer, was hot to own a bank - attempting, unsuccessfully, to purchase a small bank in Utah. The scuttlebutt at the time was that owning a bank would allow Wal-Mart to shave costs, especially those associated with accepting and processing credit and debit cards and checks. Presumably, owning a bank also would create opportunities for Wal-Mart to issue credit and debit cards to its shoppers.
Wal-Mart was forced to shelve its aspirations of bank ownership after bankers and lawmakers balked - but not its aspirations of being a bank. Wal-Mart today offers an array of financial services through staffed MoneyCenters located in about one-third of its U.S. stores. And in June 2011, the company reportedly was slated to begin opening MoneyCenter kiosks in about 1,900 Wal-Mart stores, including 20 in and around Las Vegas, that don't have full-service MoneyCenter counters. Wal-Mart is already a top seller of prepaid debit cards through its MoneyCenters and at store checkouts. The retailer also holds an ownership interest in the prepaid card company Green Dot Corp.
Wal-Mart makes no bones about its desire to become banker to America's unbanked and underserved. Services available at Wal-Mart MoneyCenter counters in addition to prepaid debit cards include check cashing, electronic bill payments, gift cards, money orders and wire transfers. Online, Wal-Mart offers an extensive array of financial education and management tools designed for the underserved.
Further evidencing efforts by Wal-Mart to bank the underserved, the company supports micro-lending through its Sam' Club warehouse chain. Small business owners who are Sam's Club members now have access to Small Business Administration-backed loan amounts ranging from $5,000 to $25,000 through a partnership Sam's Club has with Superior Financial Group LLC. One of the enticements Sam's Club offers borrowers is a 20 percent discount on loan fees.
The online micro-loan program was launched last year by Sam's Club after customer surveys indicated that nearly 15 percent of the chain's business members had been denied business loans in November 2009, up from 12 percent seven months earlier, the company said in announcing the program. Sam's Club has for many years been a reseller of credit card processing services.
Patti Murphy is Senior Editor of The Green Sheet and President of ProScribes Inc. She is also the founder of InsideMicrofinance.com. Email her at patti@greensheet.com.
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