Wal-Mart is on a roll.
Not only did it recently top Interbrand’s “The Most Valuable U.S. Retail Brands 2010” report, but the retail juggernaut is also claiming that every American consumer saves thousands of dollars a year just because there are 3,700 Wal-Mart stores across the country.
Regardless of whether you never enter a Wal-Mart and do your discount shopping instead at a Target or somewhere else, Wal-Mart’s case states that shoppers save big bucks just because of the deflationary effects of its pricing on the entire retail economy.
Now, Wal-Mart intends to intensify its similar deflationary effect in the financial-services sector. Low-income Americans, one of Wal-Mart’s prime demographics, are having increasing problems simply getting access to basic financial services – or having the incentive to use instruments as simple as a checking account.
With the credit crunch of the last couple of years, restrictive legislation and an overall more cautious approach by credit-card giants to blessing new accounts, there’s a growing pool of Americans who are known as “unbanked” and “underbanked” consumers.
Enter Wal-Mart. It now plans to open 500 more Wal-Mart MoneyCenters in its stores this year, added to the 1,000 Wal-Marts that already include the concept. These are dedicated spaces inside stores, like a bank branch, that offer basic financial services seven days a week – including bill payment starting at 88 cents apiece, check cashing starting at $3, and a reloadable prepaid Visa debit card for $3.
The company claims that its MoneyCenters already saved customers $450 million in fees last year.
The gambit puts Wal-Mart in even more direct competition with a variety of existing players in financial services, of course, ranging from Western Union to regular banks. But just as when Wal-Mart entered the grocery business, the low-priced pharmaceutical business, and the brand-name consumer-electronics trade, competitors must beware.