By Brianna Ahearn, contributing writer
Walmart has offered multiple money-related services, such as check cashing, bill pay, and money orders, for years, but is now taking a step into the banking business. On September 24, the New York Times announced is preparing to offer low-cost checking accounts. The publication reported Senior Vice President Daniel Eckert announced the checking accounts would be available to customers by the end of October. The checking accounts are thanks to a partnership with Green Dot, a prepaid debit card issuer.
Once the service is available in stores, Green Dot and Walmart will offer a checking account to any individual over the age of 18 who can pass an ID check. The accounts will carry significantly lower fees compared to a traditional bank's checking account options. The accounts will be known as GoBank, and will cost $8.95 per month for any accounts with less than $500.00 in direct deposits. No minimum balance, overdraft fees, or bounced check fees will be required. Walmart has long been a store for shoppers from every economic bracket, and this new service will hopefully help them capture lost revenue thanks to “dollar stores” and bargain retailers. Millions of households don't use banking services, largely due to low credit or expensive fees, and many will probably flock to Walmart for GoBank. Walmart hopes by encouraging their customers to shop and bank at their stores, they can win back their waning customer loyalty as customers look to other retailers for the best deal.
As the nation's biggest retailer, Walmart has long offered standard convenient services in its stores such as optometry and auto repair, as it's facing growing competition from other retailers. In response, Walmart has added these services to make it possible for their customers to do most of their errands and shopping in one place. However, TJX Companies, owner of TJ Maxx, Marshalls, HomeGoods, and Winners, has gone head-to-head in recent years with Walmart, as each company fights to win in the discount retailing arena. Walmart posted low second quarter sales in August, announcing their profits would be lower than originally forecast. Many retail analysts looked to the proliferation of dollar stores as one reason for the slump. Stores like Family Dollar, Dollar Tree, and Dollar General have begun targeting one of Walmart's biggest product categories, groceries, by introducing frozen goods and a wider range of non-perishables. TJX also poses a threat to the other big categories of Walmart offerings, including apparel and home décor.
In 2007, Walmart attempted to offer deposit-taking bank services backed by a federal charter, but faced immediate opposition from the nation's biggest financial institutions. The partnership with Green Dot will allow Walmart to omit a screening process, and offer simple checking accounts to lower income individuals or individuals with bad credit. The retailer has already offered prepaid cards such as Visa or American Express, but even those are also available at other retailers; the checking account service will set them apart from other retailers. Looking at the recent moves made by Walmart such as the addition of healthcare clinics and testing a conveniences store format, the retailer is demonstrating that's it's pulling out all the stops to remain at the top of the retail industry. The company hasn't spoken yet about its projected numbers for new checking accounts, but has promised an account can be opened within a few minutes, making it a likely draw for many households who don't use a traditional bank.