Wal-Mart expands financial services

Wal-Mart Stores Inc., already a major provider of nonbank financial services, isn't wasting any time expanding its presence.

Wal-Mart next week is rolling out MoneyCenter kiosks, offering a variety of financial services to shoppers, according to a company spokeswoman. The kiosk resembles an ATM machine and will be placed in Wal-Mart stores without full MoneyCenters.

Tara Raddohl, a Wal-Mart Stores spokeswoman in Bentonville, Ark., said that kiosks would be in about 1,900 stores, including "20 in the Las Vegas area," as part of a pilot program.

"We are creating a destination for all things financial," Raddohl said. "A one-stop destination right in stores that do not have full MoneyCenters."

Wal-Mart has more than 1,000 full MoneyCenters across the county staffed by customer service agents that provide bill payment, wire transfers, check cashing, money orders and other services.

Each service comes at a fee. For example, fees for money orders or bill pay start at 88 cents, while check cashing costs $3 and a money transfer will cost $4.75.

The kiosks give customers access to all the financial services the retailer offers, including Wal-Mart's prepaid MoneyCard and gift cards. Companies that offer financial services, banks and credit unions have been trying to encourage self-service -- whether with ATMs, online or through kiosks -- as a way to control labor costs.

Nevada Bankers Association President and Chief Executive Officer Bill Uffelman said Wal-Mart appears to be targeting the unbanked and underbanked by installing kiosks and MoneyCenters.

The unbanked are those "without an account at a bank or other financial institution and are considered to be outside the mainstream for one reason or another." The underbanked are people that have limited access to mainstream financial services and rely on alternatives such as check cashers, money orders and prepaid credit cards, according to the Federal Deposit Insurance Corp.

The FDIC estimates there are 10 million unbanked or underbanked household in the United States.

"The unbanked and underbanked spend a tremendous amount of money purchasing check cashing services and money orders, costs that could be avoided with a bank," Uffelman said.

Uffelman said the banking industry in Nevada had teamed with the United Way to offer a program called Bank on Nevada. The program brings the unbanked or underbanked into mainstream banking with "second-chance accounts" for those who have had problems managing their accounts . The accounts offer low or no-cost checking accounts with debit cards and other financial services, he said.

While local banks are reaching out, one banking analyst says they should take the program seriously because it gives Wal-Mart's target customer base more access to financial services.

"A bank and Wal-Mart's demographics are different," said Nicole Sturgill, research director with TowerGroup, a Needham, Mass., advisory firm focused on the financial services industry. "Wal-Mart targets primarily the unbanked or underbanked with prepaid cards and other financial services."

Sturgill said banks fear Wal-Mart because of the retailer's size and ability to offer financial services as part of a customer's shopping experience. In other words, customers can pick up a gallon of milk, get an oil change for their car and buy a money order to pay the rent.

Contact reporter Chris Sieroty at
csieroty@reviewjournal.com or 702-477-3893.