Wal-Mart Stores Inc.(WMT) has launched a new service called Walmart Direct2Cash, which will allow customers to pick up their tax refunds in cash at nationwide stores. Walmart Direct2Cash will help customers save their money when compared to traditional tax refund options, as the retailer will not charge a fee for the cash refund compared to a maximum of $7 charged at the time of filing for the service.
In order to execute the process, the Bentonville, AR based retailer is working with two leading providers of tax-related financial products and services namely Tax Products Group (‘TPG’), a Green Dot Corp. (GDOT) and Republic Bank & Trust Company, member FDIC, to provide Walmart Direct2Cash as an option to their customers. These companies have more than 25,000 tax-preparation locations, both in Wal-Mart stores and elsewhere, for the service.
Therefore, customers can use any one of these tax preparation locations and choose the Walmart Direct2Cash option. They will then receive a confirmation code for their federal and or states tax returns through an email from TPG or Republic Bank as soon as their refund is ready to be picked up. Customers can then go to the Walmart Money Center or customer service desk at their local stores, show their confirmation code, and by confirming their identity receive their refund. However, the service is not available for people who electronically file their own taxes.
The service is expected to attract those customers who do not have a bank account. Not only will they get their refunds more quickly but can also convert a tax-refund check into cash without paying a fee.
The latest move by the retail giant is a step further in its aim to expand its financial services business. In Apr 2014, Wal-Mart introduced a new money transfer service in partnership with Ria Money Transfer — a subsidiary of electronic payments provider Euronet Worldwide Inc. (EEFT) — that let customers send and receive cash from family members and friends from one Walmart store in the U.S. to another, at a fee much lower than comparable services elsewhere (Read: Walmart to Unveil Money Transfer Services).
In September, Wal-Mart partnered with Green Dot Corp., a company known for its reloadable prepaid cards, to bring mobile checking accounts, called GoBank to its shoppers (Read: Walmart Teams with Green Dot, Expands Financial Services).
We believe Walmart’s recent initiative to offer tax refunds could boost its business as it will provide more cash to consumers to shop at its stores. Wal-Mart is currently grappling with sluggish sales and a tough macro-economic environment.
Wal-Mart currently has a Zacks Rank #3 (Hold). A better-ranked stock in the retail sector is Ingles Market, Inc. (IMKTA), sporting a Zacks Rank #1 (Strong Buy).
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