Wal-Mart Stores Inc. (WMT) has partnered with Green Dot Corporation (GDOT), a company known for its reloadable prepaid cards, to bring mobile checking accounts, called GoBank to its shoppers. The accounts, which will be linked to Mastercard debit card, will not charge overdraft fees that traditional banks charge customers who do not have enough money in their accounts to cover purchase.
Walmart's move follows big banks like Bank of America Corp. (BAC) and Citibank, a unit of Citigroup, Inc. (C), who do not charge overdraft fees from customers. It is also a great attempt to offer banking services to budget-strained Americans.
Customers must own a smartphone to open a GoBank account at a Walmart store, since most of the banking is done through the app. These services are expected to be available at Walmart stores by the end of October. GoBank will charge $8.95 a month but will waive the fee if customers consent to a monthly direct deposit of $500. After opening the account, customers, on paying $2.95, will get a starter kit, which will include a MasterCard debit card that can be used at more than 42,000 ATMs around the country.
Not only this, GoBank customers can receive payroll direct deposit earlier than their normal payday if their employer notifies GoBank of a deposit in advance. The app also notifies customers if a purchase they are about to make exceeds of their budget, which will help customers to plan their budget in advance. In addition, customers can send money instantly to others at no charge through either email or a text message.
It seems that Walmart is trying to create a stir in the financial services market amid the dominance of traditional players in the industry. In Apr 2014, Walmart decided to launch a new, lower-priced money transfer service in partnership with Ria Money Transfer – a subsidiary of electronic payments provider Euronet Worldwide Inc. – with an aim to expand its financial services business.
The service was expected to generate incremental savings for all those millions of customers who do not have bank accounts. It was yet another initiative to attract customers and revive its struggling business (Read: Walmart to Unveil Money Transfer Services). We believe Walmart’s recent initiative to offer banking service will also help the company in attracting customers to the stores and boost traffic and sales of the company.
Walmart carries a Zacks Rank #3 (Hold).
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