Wal-Mart Stores said Wednesday that it will open 1,000 financial services centers in its stores and roll out a prepaid Visa card nationwide, in a major expansion of services the retailer provides to its base of lower-income customers.
Wal-Mart MoneyCenters, which are geared toward customers who are "outside mainstream banking," offer services such as check cashing, money orders, bill payment and money transfers, it said.
The retailer is also rolling out the Wal-Mart MoneyCard, a reloadable prepaid Visa, that it is launching nationally with GE Money and Green Dot. The card is designed for consumers who do not have bank accounts or access to credit cards, Jane Thompson, president of Wal-Mart financial services, said.
They will be able to put money on the card and use it at other stores as well as at gas stations or anywhere a Visa would be accepted. It came out of a pilot program Wal-Mart tested in the fall under the name Wal-Mart Prepaid Visa Card.
The move comes after the company earlier this year withdrew an application with U.S. bank regulators to operate a specialty bank in the face of immense opposition from politicians, consumer groups and community banks.
While Wal-Mart had insisted it wanted to use the bank to save money by processing credit-card and check transactions internally, consumer groups and banks feared the retailer would eventually provide other retail banking services, leading to the demise of community banks.
After pulling the application, Wal-Mart said it would focus on introducing new financial services, and Thompson said the company would have "a lot of things that will be coming out this year."
More Money-Centers
Wal-Mart currently has 225 MoneyCenters in its stores and expects to expand to 1,000 by the end of 2008 -- meaning it will have a center in one-fourth of its U.S. stores.
"We'll keep adding them," Thompson said on a call with reporters. "I know 1,000 is not all we'll have."
Thompson said the retailer would probably link more financial services to the card and did not want to be confined by having the word "prepaid" in its name.
The prepaid card will be introduced to roughly 1,300 Wal-Mart stores by the end of June and to another 1,300 by the end of July. It will be available at most Wal-Mart stores by year's end, Wal-Mart said.
Thompson said the retailer will be announcing more services before the end of the year.
"We have four different things that we're working on," she said, adding that Wal-Mart's financial services division, which it started about five years ago, is a profitable one, and she expects growth of 30 percent to 40 percent year over year.
"That's probably conservative," she said. "Our group is known to always make and beat their plan."