By Lauren Coleman-Lochner
June 20 (Bloomberg) — Wal-Mart Stores Inc., the world’s largest retailer,
plans to expand its financial-service centers more than fourfold to 1,000 stores
by 2009 after abandoning an attempt to start a bank.
Customers will be able to cash checks, pay bills and transfer money at 450
centers by the end of the year, double the locations open now, the company said
today in a statement. Wal- Mart, based in Bentonville, Arkansas, also will offer
its MoneyCard debit card nationally.
The expansion comes a month after the U.S. House of Representatives passed
legislation to block non-financial firms, including retailers, from operating
banks. Wal-Mart offers the services through partnerships with Visa International
and General Electric Co.’s bank and plans to expand its financial products.
The MoneyCenters are the most profitable departments in stores, Jane
Thompson, president of the Wal-Mart Financial Services, said in an interview
today in New York.
Revenue from money services has climbed more than 30 percent annually since
Wal-Mart began offering them about five years ago, she said in a conference call
earlier. The retailer anticipates that pace will continue.
Wal-Mart intends to measure if the cards and additional MoneyCenters boost
store sales and attract more customers, Thompson said in the interview. Traffic
has declined every month this year. Sales at older locations rose 0.6 percent in
the first quarter, the slowest gain since at least 1996.
“I think it will get them coming back more,” she said. Customers visit
Wal-Mart stores an average of 2 ½ times a week.
The retailer is testing four other financial products and plans to announce
new services later this year, Thompson said during the call. She didn’t
Shares of Wal-Mart fell 22 cents to $48.59 at 4:29 p.m. in New York Stock
Exchange composite trading. They have gained 5.6 percent since March 15, the day
before Wal-Mart withdrew its bank application.
Wal-Mart cut prices on thousands of items in toys, electronics and groceries
starting in October ahead of the holiday season to try to boost its image as the
retailer offering products for the lowest cost and to offset higher gas prices,
which have hurt Wal-Mart sales.
The expansion of MoneyCenters is a more effective way to add shoppers than
price cuts because the services have higher profit margins, Adrianne Shapira, a
Goldman, Sachs & Co. analyst, wrote in a note today.
“That said, we question how fast debit card adoption rates will rise among
these customers as it likely will take time to change customer behavior,” she
said. Shapira, based in New York, rates shares “neutral.”
In March, it withdrew its 2005 application to open a Utah bank for payment
processing amid opposition from legislators and lenders.
“It looks like they’re building the infrastructure for a nationwide network
of bank branches,” said Steve Verdier, a lobbyist at the Independent Community
Bankers of America, a Washington-based trade group that led the fight against
Wal- Mart’s bid.
MoneyCard users can make purchases with the prepaid Visa, pay bills or add
more money to their accounts at Wal-Mart or through the Green Dot
automated-teller network. It doesn’t require a bank account or credit-background
check. It’s offered with GE Money Bank.
Wal-Mart’s customers with lower incomes often don’t have access to bank
accounts and use the prepaid cards to deposit paychecks and pay bills, Thompson
said. The retailer estimates about 73 million Americans don’t have checking or
savings accounts or credit cards.
The company has more than 3,300 Wal-Mart discount stores and supercenters in
To contact the reporter on this story: Lauren Coleman-Lochner in New York at
Last Updated: June 20, 2007 17:12 EDT