Walmart Launches Money Transfer Service, with Limits

Walmart's new "Walmart-2-Walmart" transfer service will enable consumers to send money to each other by using the retail chain's store network.

The retailer on April 24 will introduce this service in partnership with Euronet Worldwide's subsidiary Ria Money Transfer. Walmart-2-Walmart will support domestic cash and PIN debit transfers at Walmart's 4,000 U.S. locations. Consumers can send up to $50 for a fee of $4.50, and up to $900 for a fee of $9.50.

"The service leverages our footprint and large scale to enable a low-cost service," said Daniel Eckert, senior vice president of services for Walmart U.S. on an April 17 conference call. "There is a large underbanked population in the U.S. that uses money transfer as a primary method."

The program is a potential competitor to Western Union, though the Walmart program is limited. It does not allow transfers outside the U.S and has no online component. It also prohibits transfers larger than $900.

The Walmart service will not change the retailer's relationship with MoneyGram, which enables a full range of transfer services from Walmart's stores, Eckert said. MoneyGram was told of Walmart's interest in a money transfer service during Walmart's most recent contract extension negotiation about a year ago, Eckert said. He did not elaborate on the details of those discussions and MoneyGram did not immediately return a request for comment.

"MoneyGram continues to be a very valuable partner for us. What Walmart does is provide some added choices for customers. We do best when we provide a broad assortment of products at a low price and let customers choose," Eckert said.

Walmart also offers financial services such as prepaid debit cards through partnerships with American Express and through Green Dot.

As with Walmart's other forays into financial services, the retailer is structuring the transfer service to minimize regulatory pressures. The new program's restrictions enable Walmart to avoid certain rules regarding transfers, Eckert said.

"With 'will call' money transfer services there are certain breakpoints where we are required to capture additional information and file activity reports with authorities in states and the national government," Eckert said. "That builds on added costs."

While Ria operates an international transfer service, Walmart currently plans to limit transfers to the U.S.

That may put the program at a disadvantage, says Phil Philliou, who operates Philliou Partners, a payments consultancy.

"I'm wondering what the use case is in the U.S. How valuable will this service be?" Philliou says.

The larger opportunity in money transfer is the international market, he says. "The Walmart service sounds like a good experiment, and if Walmart has aspirations to get involved in the international market, where someone could send money from the U.S. and pick it up in Mexico, that is very interesting," he says.