Walmart is no longer just your doctor, supermarket, or big box retailer. Now it also wants to be your bank.
On Tuesday, the retail giant announced it would be partnering with Green Dot Bank to begin offering Walmart customers checking accounts. The accounts will be provided through GoBank, Green Dot's mobile checking service, and are scheduled to become available nationwide by the end of October.
To join, customers must buy a GoBank "starter kit," which includes a starter MasterCard debit card, for $2.95. Users can deposit cash into their GoBank account at any Walmart, and each store will be outfitted with one of the bank's 42,000 free ATMs. Green Dot claims virtually any customer who passes an ID check will be accepted, meaning even those with low credit should be able to open an account.
This is not Walmart's first forway into the world of finance. The company previously tried to obtain its own bank charter in 2007, but was rebuffed by the banking industry. Subsequently, Walmart has provided numerous "fringe-banking" services, such as check cashing, payday loans, bill pay, money orders, and a suite of prepaid cards and checking alternatives. Many of the store's locations feature a MoneyCenter for the company's financial products and the Walmart website includes a section devoted to "Payday Solutions."
In addition to foregoing a credit check, GoBank promises to offer a number of attractive features to low-income consumers. The service does not charge overdraft fees, and GoBank will waive its $8.95 monthly charge for all accounts with direct deposits of at least $500 per month. Walmart highlights one study that showed consumers pay between $218 and $314 a year for a basic checking account.
However, GoBank also does not include other common banking services. Money stored with the GoBank does not earn interest. And unlike most checking accounts, these do not offer users paper checks; instead, GoBank refers customers to its online bill-paying service.
Faye Landes, a retail analyst at Cowen investment management group, described to the New York Times Walmart's entrance into banking as a savvy play to help the chain lure back customers who have jumped ship to even cheaper competitors. “Their core consumer, the lower-end consumer, is faring disproportionately poorly in the overall economy,” Landes told the paper. “Anything they can do to get them back from the dollar stores and back in their own stores makes total sense.”
In a press release, Daniel Eckert, senior vice president of sales for Walmart U.S., presented GoBank as an alternative for consumers who increasingly cannot afford traditional banking solutions. "This product is really designed toward Wal-Mart shoppers who find themselves dissatisfied or unhappy with the fees and costs associated with traditional banking," Eckert told the L.A. Times, "as well as customers with a spotty record of managing their account."