Wal-Mart Stores Inc. (NYSE:WMT) becomes active in banking services – offers more to its customers

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By Ross Schwartz on September 24, 2014 Company

The US retail giant Wal-Mart Stores Inc. (NYSE:WMT) has finally struck a deal with Green Dot Corporation (NYSE:GDOT), which is a company for pre-paid cards. The deal will allow Wal-Mart Stores Inc. (NYSE:WMT) to offer its customers the facility of checking accounts. This move will help the retailer expand its financial services, which have been a challenge because of the US banks’ efforts that hope to have these services blocked.

User accounts that will become active through Wal-Mart Stores Inc. (NYSE:WMT)’s partner – Green Dot – will enable their users to make direct deposits. According to Wal-Mart Stores Inc. (NYSE:WMT)’s statement that was released today, the users who will make direct deposits will not be charged any minimum-balance, overdraft or even monthly fees. These accounts can also be used through debit cards of MasterCard Inc. Wal-Mart customers will be able to get their accounts activated somewhere in October this year.

This is not the first financial services expansion from Wal-Mart Stores Inc. (NYSE:WMT), the giant retailer has made several efforts in the last ten years; one such measure includes a deal back in April earlier this year to offer its customers the facility of money transfer.Wal-Mart Stores Inc. (NYSE:WMT) also tried to open an industrial bank in Utah back in the year 2005; however the company faced strong resistance from labor organizations and US lenders in this regard and was denied a Bank Charter. After struggling for 2 years, Wal-Mart Stores Inc. (NYSE:WMT) finally put an end to this movement in 2007.

According to Wal-Mart Stores Inc. (NYSE:WMT)’s senior Vice President, Daniel Eckert, customers want a lot more comfort when it comes to handling their day to day finances – they want easier payment methods. The traditional banking charges higher fees as a result of which customers feel they are not getting great or enough value for their money.

Green Dot had a good day today at the New York stock exchange when it went up by 15%; the credit card company had taken a dip by 25% earlier this year. Early trading session brought good news for Wal-Mart Stores Inc. (NYSE:WMT) as well as the stock jumped by 0.4% to land at $75.89.

Wal-Mart Stores Inc. (NYSE:WMT) has active centers for its customers where they can pay bills and cash checks. It has also struck a deal with Green Dot and American Express Co. to offer debits cards (prepaid) to its customers. American Express had further extended its services last by allowing the retailer to offer deposit insurance and permission to write checks through its Bluebird Prepaid Cards, which are sold by Wal-Mart Stores Inc. (NYSE:WMT).

These arrangements by Wal-Mart Stores Inc. (NYSE:WMT) are not sitting well with the banks who feel that the retailer may create unfair competition as it is not governed by financial regulations that are imposed upon banks.

Wells Fargo & Co.’s ex- CEO Richard Kovacevich believes that Wal-Mart Stores Inc. (NYSE:WMT) should be “kept out of business”. Banks are not allowed to enter commerce business therefore commerce should be kept out of banking business.

Wal-Mart Stores Inc. (NYSE:WMT) stock opened up at $75.73 today and at 10:23 am was trading at a value of $76.43.