Ricochet is the best place on the internet to discuss the issues of the day, either through commenting on posts or writing your own for our active and dynamic community in a fully moderated environment. In addition, the Ricochet Audio Network offers over 50 original podcasts with new episodes released every day.
The Bank of Walmart
I’ve argued before that there’s something lopsided about our current political landscape. Whatever it is that the Tea Party represents — and it’s represented a lot of different things to a lot of different people — its consistent thrust has been this: that the country is increasingly run by an oligarchical elite from both parties, that the financial system is rigged against Main Street by sharpies on Wall Street, and that the lack of social and economic mobility in America is a worrying development.
So, ask yourself this: which brands do you trust? Which brands, as an American, do you think most Americans trust? Now ask yourself this: why not the Bank of Walmart? From the The NYTimes:
After years of thwarted efforts to break into banking, Walmart is making its biggest foray yet into everyday financial services.
Walmart, the nation’s largest retailer, is teaming up with Green Dot, known for its prepaid payment cards, to supply checking accounts to almost anyone over 18 who passes an ID check.
Daniel Eckert, senior vice president at Walmart, said on Tuesday that the accounts would be available nationwide by the end of October. The accounts are intended to be low-cost alternatives to traditional bank checking accounts, with no fees for overdrafts or bounced checks and no minimum account balance.
After years of high-priced, fee-based banking, large discount retailers are discovering the pot of gold at the bottom of the rainbow:
GoBank, as the service is known, is part of Walmart’s long-running push into financial services for people with little or no access to traditional banking. In recent years, many banks have reduced services to those with weak credit. According to the Federal Deposit Insurance Corporation, an estimated 10 million households in the United States do not use a bank.
If a brand that manages to deliver low-cost goods to customers in a satisfying way wants to branch out into financial services, what should stop them from doing the same thing in, say, health care or education?
I’m not sure this represents another dot in my connect-the-dots picture of an America waking up to its class-bound society, but it’s a good thing, I think, for a powerful and successful retailer to go after the financial services sector. I’m hoping for more of the same.
If the Bank of Walmart can be a trusted financial services partner, I’d like Apple, or Google, to develop an at-home science and technology curriculum.
Why not? Those brands — unlike, say, the federal government — have earned our trust and have a lot to lose if they fritter it away.
Image Credit: Flickr user Mike Mozart.
Published in General
Walmart’s entry into financial services doesn’t seem much different from Sears. As a kid I remember Sears stores having an area where you could get Allstate insurance and investment help. They also created Discover card. (And part of Walmart’s strength is that they’re in all those rural areas you wouldn’t find a Charles Schwab or Edward Jones.)
As for me, I’ll get my financial advice from Target since the late notices would have better graphic design.
It’s a good thing.
Doubt we’ll be changing, we’re super-satisfied with our current mega-bank. That being said, the competition will keep our current bank anxious to keep us satisfied.
I guess Walmart decided to get in on the “Too Big To Fail” bandwagon.
“…what should stop them from doing the same thing in, say, health care or education?”
Walmart’s already there:
“Our $4 prescriptions have saved our customers over $3 billion”
http://www.walmart.com/cp/4-Prescriptions/1078664
The biggest difference between the Federal Government and Walmart is that Walmart tries to be efficient, and to keep lowering its costs and its customers’ costs.
A large part of the reason the big banks are getting more expensive and cutting services is due to Federal regulations like Dodd-Frank.
Then You must support abortion.
And I thought I knew You….
Imagine how much Walmart will save by processing their own debit card transactions…
We use our local credit union, as could lower-earning people. Fees are much lower, and everything is local, unlike big banks or big retail.
Hope it works out better for them than Sears.
Sears bought Allstate right before Hurricane Andrew destroyed South Florida. As for Discover card, other retailers wouldn’t accept it as long as it was owned by Sears. Why subsidize your competitor?
It might be worth remembering, Jon, that Sears Financial absolutely crashed and burned. They lost tons of money, divested themselves of Discover and Allstate and, oh yeah, almost went bankrupt. In fact, they’re still working on the bankrupt thing.
What I like about this is that it will be a huge attack on the payday loan sector. Traditionally, they’ve been the only place that poor people know about to cash a check and other services that bank-using people take for granted. Having been caught up in one of those companies’ prepay cards — that charged a dollar per use and still wasn’t accepted for over-the-phone payments — more options for poor people that don’t involve that industry is all for the better.
Add some low cost index and bond funds that aren’t actively managed, and they could actually improve the fiscal situation of a lot of people of modest means.
USAA takes real good care of me, so I probably wouldn’t switch.
Just remember it was the repeal of Glass-Steagal that let financial institutions be full service institutions instead of silos. My life is so much better since the end of that depression era stupidity.
Up here in the Great White North, Loblaws (the country’s biggest grocery chain) has offered no-fee banking services for quite some time. I’ve often considered moving my bank accounts over, but I’m lazy. Laziness is a dumb reason to keep paying fees.
Sears is now K-Sears… They merged with K–Mart…
Consider this: Walmart now has a 50% + share of the grocery business in the US.
If a family concentrates their retail purchases at Walmart, they can increase their buying power by as much as 15% per year.
Any other questions ?
p.s where else can you buy a laptop, single malt scotch and live bait (worms for you urbanites) ?
K-Searts.
Need a Bank of Amazon!
This was the original inversion. Inversion of financial sanity, that is.
Amazon already has all our money. :/
———————————————
Sometime within the last several months I heard rumors that Walmart was thinking of breaking into the medical provider business with low-cost clinics for sore throats and sniffles kinds of stuff. I think it’s a great idea and I hope they follow-through. You shouldn’t have to use your insurance and pay a co-pay to get a strep test. C’mon.
Apropos of nothing except that I think it’s cool. Green Dot is located in my little town of Monrovia. If the legend is accurate, the founder started it with a $20K loan from his 401(k). (I do business with a few folks who do business with Green Dot)
Reminding me why this is STILL a great country.
Insurance is ripe for the taking of cash rich tech companies. Most insurance companies have antiquated and very costly IT systems and poor processes (agent heavy). In spite of it they make a lot of money.
A tech driven innovative alternative would make even more money while driving down prices. Google Insurance?
If you’ve never tried to get an unused hold authorization on a Walmart/Green Dot card released, you don’t know what bad customer service is. Prepaid debit cards in general have bad customer service, but Walmart/Green Dot is bad on toast.
I like Walmart. I shop regularly at Walmart. I get my prescriptions at Walmart. But I would never put a dime of my own money in a Walmart debit card.
It was a real estate play that hasn’t played out.
Is the italicized sentence true even of Americans? I may have to start advising folks over here to get Swiss bank accounts.
Steve Martin used to do a routine about how people would only take their money to a bank with solid words in its title, like “Federal” and “Security” and “Fiduciary” and no one would take their money to say, “Joe’s Bank”. “Hi, I’m Joe, and this is my bank…Let me take your money and put it….Here…I can clear some space off on this shelf.” I shop at our local Walmart pretty regularly, but I’m not sure I’d be excited about the staff in our local store handling my money.
Dodd Frank made it unprofitable for banks to service a larger segment of those at the lower end of the economic ladder. Walmart sees an opportunity and is moving in to take advantage of it. Government screws things up and the market is repairing some of the damage. Whats new?
I hope no one tells the government that Walmart is doing this!
just heard a news story the other day (on NPR?) that WalMart is opening health clinics in some of its retail sites. Physicals, tests, etc. with licensed professionals and labs on site.
http://www.walmart.com/cp/Care-Clinics/1224932
http://www.walmart.com/cp/Walmart-Clinics/1078904
A few years ago Wal-Mart went into business with American Express to create the Bluebird card. It acts like a debit card, but money can be deposited easily from cash, credit card, or a bank account, or from payroll or social security. The best feature is the ability to set up sub accounts, and easily transfer money from the main account to the sub account, or between yours and other accounts. I use it to give money to an indigent relative; it works well for giving money to elderly parents as well. Good credit standing is not required. So this is not the first time Wal-Mart has ventured into banking for the emerging credit-challenged population.