Walmart Targets Unhappy Bank Customers With New Prepaid Card–Should Big Banks Be Nervous?
Walmart wants to be your new banker.
Walmart launched Bluebird, an alternative to debit and checking account. Should banks be nervous?
Today Walmart announced an alternative to traditional debit and checking accounts in partnership with American Express. The Bluebird accounts target consumers who are fed up with increasing fees from traditional bank accounts.
The Bluebird accounts will have no minimum balance requirement and no monthly maintenance, annual or activation fee. Customers can access their money for free using one of 22,000 American Express MoneyPass ATMs, but will be hit with a $2 fee if they are not enrolled in direct deposit.
Walmart says the card was launched in response to consumers who say they are not getting the value they expect from traditional bank accounts with debit cards because of their increasingly higher fees. (Think: Bank of America, JPMorgan Chase, Citi and Wells Fargo’s debit card fee debacle last year.)
It’s true the cost of banking has increased recently. A survey this summer of 50 of the nation’s largest banks finds that basic banking costs jumped in just about every category in 2012 including the minimum amount required to open an account which jumped to $408.76 on average up from $391.41.
Walmart cites a Bretton Woods study that shows consumers now pay an average of $259 per year for a basic checking account and says “that cost is rising due to higher minimum balance requirements and a growing list of fees being added to these services.”
The rise in the cost of traditional banking is one reason some consumers ended their relationship with banks. The FDIC says one in four (28.3%) of all U.S. households conduct some or all of their financial transactions outside of the mainstream banking system. They’re called the “underbanked” or “unbanked”. Their main reason for skipping traditional bank accounts: They believe they do not have enough money to open one or that they do not need or want an account.
Walmart thinks it can help those consumers with its growing financial center offering everything from check cashing, money transfers, bill payments and pre-paid debit cards. It already has another prepaid card in partnership with Green Dot called the Money Card. That card carries a $3 monthly fee.
It’s unclear how much money Walmart makes off its financial offerings. Daniel Eckert, vice president of financial services for Walmart U.S would not detail exactly how it will benefit financially from the new Bluebird accounts.
Bank analyst Dick Bove speculates that it could be receiving a commission from American Express every time cash is loaded on to the card or that it might be sharing in the return on the float.
American Express would not disclose terms of the economic agreement with Walmart.
One thing seems certain and that’s Walmart’s ability to save money on customers who will use these Bluebird accounts versus traditional bank-issued debit cards.
http://www.alienadam.com
2012-10-09 10:23:46
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