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Retail giant Wal-Mart announced plans to offer its own Visa debit card and open 1,000 more MoneyCenters for check cashing, money orders and other financial services, much to the dismay of the banking industry. A business reporter examines the move.
Earlier this year, in the face of fierce opposition, Wal-Mart abandoned plans to create its own bank. But late yesterday, the retailing giant announced it will rapidly expand into the financial services business anyway. Wal-Mart will create money centers in nearly one-third of its 3,300 stores by the end of 2008. At those 1,000 locations, customers will be able to cash checks, pay bills and complete money orders. There are 225 such centers currently.
The retailer will also issue its own prepaid Visa debit card, which can be used at its stores, other retailers, or ATM machines. Customers may deposit their entire paycheck onto the card. The card will cost about nine dollars and charge a roughly five-dollar monthly fee.
For more now, we turn to Michael Barbaro of the New York Times. And, Michael, welcome.
MICHAEL BARBARO, New York Times:
Thanks for having me, Margaret.
Let's start out with who this is aimed at. Wal-Mart says it's aimed at the un-banked and underserved. How big a customer base is there? And who are they?
This program reveals a lot about who shops at Wal-Mart. When Wal-Mart talks about the un-banked, it's talking about 70 million Americans who don't have a relationship with a bank, don't have a bank account of any kind, savings or checking. About half of those shop at Wal-Mart.
And these are people who, for a variety of reasons, don't trust banks, have been disqualified from having a bank account. They may be illegal immigrants. They may not believe that putting their money in a bank is a wise idea. And these are people that the banking industry has been trying to get a hold of for a very long time, and they happen to be some of Wal-Mart's best shoppers. So Wal-Mart sees a huge opportunity to take people who are in its stores and offer them banking services.
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