Walgreens — Your Neighborhood Bank?

By Sam Lewis

Nation’s largest drugstore chain launches financial services initiative

Walgreens continues to launch new programs as it seeks to further expand its brand after reporting record sales for fiscal 2013. On Monday, Oct 7 Walgreens announced the launch of Balance Financial, a complete line of financial services products built around the company’s Balance Prepaid MasterCard. Currently, the program is available in about 250 Walgreens locations in Detroit, Milwaukee, and Nashville.

The company began the program to service 60 million Americans, or one in four households, that do not have the services of a traditional financial institution. Many Americans seek the convenience and security banks offer in bill paying, fund transferring, check depositing, and shopping, as opposed to strictly cash transactions. This is where Walgreens steps in. “Millions of Americans do not have — or want alternatives to — traditional checking accounts and debit cards,” says Walgreens VP and treasurer, Jason Dubinsky. “For them, Balance Financial will represent safety, convenience, value, and rewards.”

Balance Financial will be fueled by payment processing solutions company Galileo and will offer members many of the same services as traditional banks. Included are:

-The Balance Financial Prepaid MasterCard serving as a replacement to cash and be reloaded at any Walgreens or Duane Reade location
-No-charge ATM withdrawals for cardholders at most Walgreens locations
-Balance Financial Prepaid MasterCard deductions for cash up to $100 from Walgreens cashiers
-Payroll, tax refund, and government benefit check-cashing at pilot stores for Balance Financial cardholders
-Earning rewards points by using the card. Details are available here
-Multichannel offerings through Balance Financial’s in-store kiosks, mobile app, and website
-Online bill paying through Balance Financial’s cardholder website
-The convenience of The Balance Financial Prepaid MasterCard allows the card to be used as a debit card everywhere MasterCard is accepted

Walgreens plans to have a nationwide card rollout before 2013’s end, with additional financial services being made available in 2014. These services will include expedited bill payment services and Western Union Money Transfer. “In bringing together leading financial services partners, we have developed an easier way for millions of customers to manage their money in-store, online, or with a mobile device,” says Dubinsky.

Many Americans seeking alternatives to traditional banking options, but still desring the safety and convenience offered by them, may pursue Walgreens’ new endeavor. This hybrid program involving retail and banking is a fascinating undertaking from Walgreens. It will be interesting to see if the effort, ultimately designed to boost store traffic and increase loytalty, will catch on and become one of the retailer's mainstays.