With plenty of Americans still struggling financially, Walmart says it is stepping up its offerings to the "unbanked" -- people unable to afford basic checking accounts -- and will open 500 more Walmart MoneyCenters this year. First introduced last August, the concept is currently in 1,000 stores. With the additional rollouts, the Bentonville, Ark.-based retailer says they will be in roughly 40% of more than 3,700 U.S. stores.
Walmart's "target market is both the unbanked and underbanked population," Greg McBride, senior financial analyst at Bankrate.com, tells Marketing Daily, "and that is also a growth segment, particularly with recent legislation that makes it more difficult for consumers with poor credit to get credit cards, and the potential for reduced availability of free checking. And that population seems poised to continue growing."
In December, the Federal Deposit Insurance Corp. released a survey that found 25.6% of all U.S. households are unbanked (7.7%) or underbanked (17.9%). (Unbanked means no member of the household has either a checking or savings account; underbanked means they do have at least one such account, but also rely on alternative financial services such as non-bank check-cashing services, payday loans, rent-to-own agreements, or pawn shops at least once or twice a year.)
Walmart's MoneyCenters are dedicated spaces inside stores, offering basic financial services seven days a week. The company claims the Money Centers saved customers $450 million in fees last year, offering check cashing starting at $3, bill payment starting at 88 cents, and the Walmart MoneyCard, a reloadable, prepaid Visa debit card, available for $3.
"American families underserved by traditional financial institutions can have many of the advantages of a checking account, including depositing their paychecks on a safe and secure card, checking their balances, paying bills and shopping anywhere Visa debit is accepted," it says in its release, with no overdraft fees. The centers also offer money transfers, a service that puts them in competition with many banks.
McBride says that increasingly, banks are becoming more conscious of these lower-income consumers as potential customers, with an eye toward more affluent days ahead.
"Right now, Walmart is competing with a variety of different types of institutions, including payday lenders and check cashers, and anyone in the money transfer business. And in some sense, there is competition for that consumer now because banks are trying to do a better job with outreach to the underbanked and unbanked -- they, too, recognize that it's a growth segment, and that a lot of those consumers will eventually be good candidates for the products and services banks offer."