Bank Fees See Customers Flee to Wal-Mart for Banking Services
As a result of customers growing tired on high bank fees, people are going to Wal-Mart to handle banking matters.
Rather than make deposits into bank accounts, Wal-Mart customers can cash work and government checks, pay bills, wire money overseas or load money on to a prepaid debit card. At most Wal-Marts without dedicated Money Centers, the financial services are available at the customer service desks or kiosks.
As opposed to other check-cashing stores that charge a percentage of the check, Wal-Mart can cash checks at its Money Centers for a $3 flat fee.
Four years ago, Wal-Mart abandoned its plans to obtain a long-sought federal bank charter amid opposition from the banking industry and lawmakers, who feared the huge retailer would drive small bankers out of business and potentially conflate its banking and retail operations.
“We have a tremendous opportunity ahead of us, and it’s largely due to what you’re seeing around us happen in the industry,” said Daniel Eckert, the head of Wal-Mart Financial Services, told The New York Times. “We’re not a bank, but we can serve a lot of types of functions you would see someone go into a bank for.”
Some authorities are concerned that as a non-bank that offers financial services, Wal-Mart doesn’t face the same financial regulations as banks. The Consumer Bankers Association, for example, raised that point to the new Consumer Financial Protection Bureau, which is deciding how it will regulate non-bank financial institutions, according to the Times story.
Wal-Mart said it was simply offering financial products for less than its competitors, much the same way it does for underwear, detergent and milk. Wal-Mart does not produce the financial products, but sells them on behalf of financial firms. In doing so, the retailer is able to avoid financial regulations and, because of its size, offer steep discounts.
