MADISON, Wis.-Credit unions should be taking note of Walmart's plans for retail financials services in the U.S. and Canada, according to a new report from the Filene Research Institute. The report, "The Blended Walmart Business Model," by Filene Research Fellow Robert Manning, "brings a critical eye to Walmart's claims of low-price leadership in financial services," according to Filene. Among the issues addressed in the report:
• Walmart still wants a bank charter. The report states the potential from finance and penalty fees combined with interchange fee savings' could easily garner more than $1.3 billion annually from Walmart's payment card system and portfolio of customer credit card balances.
• Walmart offers convenient locations and hours, welcoming atmosphere, familiar customer service, straightforward fees, and fast transactions.
• The profit margins of Walmart's traditional retail sales average 23.7% gross and 3.5% net, whereas the averages for comparable financial services companies range from 14% to 38% gross and 6% to 9% net.
