On 16th April 2014, Walmart Inc stated that it would announce a new service with Euronet Worldwide Inc, an electronics payment provider. Yesterday, the two companies held a conference to announce the details of the new service - WalMart 2 WalMart money transfer.
WalMart announced that the new service would cut transaction fees for its low income customers by nearly 50% in comparison to other offerings. The service will be made available beginning April 24th.
- 8.2% of households in the U.S are "unbanked" and another 20.1% are "underbanked”, according to a report by the Federal Deposit Insurance Corp.
- This makes money transfers significant in terms of personal finance management.
- Walmart 2 Walmart enables its customers to transfer upto $900 between any of the 4,000 Wal-Mart stores in the country.
- Upto $50 can be transferred for a service fee of $4.50 and $900 for $9.50.
- Other services in comparison cost almost $70 when transferring less than $1,000, according to Wal-Mart.
“This is an extension of Walmart’s larger financial services strategy. It’s adding one more service to form the full sweep of basic financial services offerings. If customers are able to make financial transactions in a Walmart store, then they’re more likely to stay and buy something too. Walmart wants you to cash your check there, pay your bills there, send your money to family there and shop. This is Walmart saying, ‘Don’t leave my store’,” Ben Jackson, senior analyst at Mercator Advisory Group told Forbes. “The big strategy is capturing people’s wallets as soon as they are filled. If a customer’s wallet is filled at a Walmart store, then it’s likely the customer will do some incremental shopping there too.”
MoneyGram and Western Union suffered a drop in shares on Thursday, following the announcement of WalMart 2 WalMart Service. Shares of MoneyGram lost 17.7%, or $3.18. Western Union, lost nearly 5%. WalMart and MoneyGram’s partnership began nearly 10 years ago, with the former being MoneyGram’s largest agent in its huge global network. However, customers can still transfer money through MoneyGram.