Wal-Mart Launches Massive Incursion Into Retail Banking

BENTONVILLE, Ark. – Just months after abandoning its bid for a banking charter, Wal-Mart Stores unveiled plans yesterday to expand its chain of MoneyCenter financial service facilities to 1,000 of its stores by 2008. The Centers, many of which will compete with in-store credit union and bank branches, will be aimed at the growing unbanked and underbanked market, the company said. Wal-Mart already operates 225 MoneyCenters, which provide check cashing, money transfers, bill payment and money orders, and will offer the company’s new prepaid Visa debit card, also rolled out yesterday. The company is also building its own ATM network, which it has tested in several locations. Credit union representatives, who have been expanding their Wal-Mart branches–First Community CU opened a branch inside the new Wal-Mart SuperCenter in Collinsville, Mo., this week–were trying to digest yesterday’s news. Taylor Scott, vice president of new branch development at ORNL FCU, said he believes the Wal-Mart plans are aimed at moving the high volume of check cashing and other financial services from the customer service desk to a designated area to speed up services. “It sounds a lot worse than what it is for credit unions that are in Wal-Mart now,” said Scott, whose Tennessee credit union operates three Wal-Mart branches and plans another. “They may hand out brochures about lending and other stuff, but they’re not going to doing any lending, as far as I know.” Representatives of Landmark CU, which operates two Wal-Mart branches in Milwaukee, questioned the company’s commitment earlier this year to stay out of retail banking. “If that’s not banking activity, I don’t know what is,” said Pat Ramson, spokesman for $1.1 billion credit union, of the financial services to be offered at the MoneyCenters. More than 300 credit unions and banks operate about 1,300 branches inside Wal-Marts, about 135 of which are credit unions. Earlier this year, Wal-Mart withdrew its application for an industrial loan company charter after the banking bid caused a furor among community banks–many of which operate Wal-Mart branches--who worry the retail giant would compete with them for customers. During the controversy, Wal-Mart insisted it had no plans to create a retail branch network, but only wanted the bank charter to access the Federal Reserve’s payments system, in order to save on the billions of dollars in payments processing and interchange fees it pays each year. The company has obtain approval and has begun building a retail bank network in Mexico.