Wal-Mart Stores, Inc. (NYSE:WMT) will offer a low-cost checking account in partnership with prepaid-card firm Green Dot Corporation (NYSE:GDOT), with the program aiming to serve the nation’s under-banked.
The checking services, under the name GoBank, offer a host of modern features and are linked with the MasterCard debit card.
GoBank for under-banked
In a statement issued Wednesday, September 23rd, Green Dot Corporation (NYSE:GDOT) CEO Steve Streit said “GoBank is breaking down the barriers to traditional banking and brings the benefits of a FDIC-insured checking account that’s loaded with features to a large segment of Americans”. The accounts will not have any minimum balance nor overdraft fees. GoBank’s $8.95 monthly cost would be waived with a monthly direct deposit of $500 or more.
The retail giant’s first foray into full-service checking account is intended to fill the gap where traditional banking fails. It will not use a credit bureau rating to determine eligibility; instead potential customers only need to pass ID verification. Following the recession, several banks have tightened standards for banking services, thus depriving those with weak credit of banking services. According to the Federal Deposit Insurance Corporation, nearly 10 million U.S. households today do not use a bank.
Decade long effort
Bentonville, Arkansas-based Wal-Mart Stores, Inc. (NYSE:WMT) has expanded in financial services in the past decade, though it hasn’t been able to get a bank charter amid resistance from U.S. lenders and labor organizations. They opposed the retailer’s application to open a Utah-based industrial bank in 2005, and the retailer abandoned the effort in 2007.
Wal-Mart Stores, Inc. (NYSE:WMT) has opened in-store centers where customers can cash checks and pay bills.
In April, the retailer unveiled its Wal-Mart-2-Wal-Mart money transfer service to the 34 million households in the U.S. that were classified as ‘unbanked’ or ‘underbanked’ in a 2011 study by the FDIC.
The retail giant also allied with American Express Company (NYSE:AXP) to offer check-writing capabilities and deposit insurance to its Bluebird prepaid cards sold by the retailer.
Interestingly, when it comes to turning dollars into more dollars, the most profitable banks may be the small banks located within Wal-Mart Stores, Inc. (NYSE:WMT) as these banks have been racking up profits through fees and other charges to the retailer’s customers.
