Walmart Wants to Be Your Bank, People Who Are Sick of Banks

The banking sector is slow and ungainly, bloated with taxpayer money, and fettered with poorly thought out regulations. Other firms have been sniffing around the banks' turf for awhile now, and Walmart has just made a big move, offering pre-paid American Express cards that will act as debit or credit cards, let users withdraw cash from ATMs, and eventually allow them to write checks. The cards require no minimum balance, and there's no such thing as an overdraft fee.

Walmart first tried and failed (and failed and failed and failed) to get a bank charter. Now their attitude seems to be "screw it, death to banks." Their customers may feel the same way.

According to a recent government survey, nearly 1 million households exited the banking system from 2009 to 2011. One in four American households, or 28.3 percent, had one bank account or no bank accounts as of last year. A third of these households told researchers that they did not have enough money to open and fund an account.

Banks will still have a role to play in our Walmartified financial future, but they may be pushed out of the retail business:

“What’s interesting about this product is that anybody can manage their money on a day-to-day basis without ever really having to step foot in a bank branch,” said Jennifer Teshcer, president and chief executive at the Center for Financial Services Innovation, a think tank. “Banks will continue to play an important role in safeguarding our funds,” she added, “but whether they will continue to be the front door for the mass market is what’s at stake.”

Naturally, the U.S. Consumer Financial Protection Bureau is gearing up to regulate the pre-paid cards.

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  • tarran||

  • ||

    What is this that thing called? Compilation? Computation? Pompetition?

    Ah screw it, I'm sure the government will step in so that I don't have to remember that word.

  • Tulpa Doom||

    Garage reference in 3...2...1...

  • $park¥||

    What's next, hand jobs at Starbucks?

  • Hugh Akston||

    Might actually make Starbucks worth visiting.

  • ||

    Not likely. That's the Fifth Seal. Or is it the Sixth? I forget.

  • Pro Libertate||

    Doc! Still chewing semuta?

  • LTC(ret) John||

    +1 Captain Nefud

  • Pro Libertate||

    The doc is my Dune foil. Almost the last one remaining, as Stevo and others were killed in the Great Libertarian Purge.

  • LTC(ret) John||

    So even your name is a killing word?!

  • Pro Libertate||

    Walmart was trying to do this years ago, and everybody and their mother wanted to block them. As far as I could tell, the reason was that Walmart could wreak havoc in the industry by being extra competitive. Can't have that, not in banking and lending.

  • sarcasmic||

    Naturally, the U.S. Consumer Financial Protection Bureau is gearing up to regulate the pre-paid cards.

    Well, duh! How can any business be trusted to do anything without government oversight? Without some government idiot telling the expert how to do their job, it would never be done properly!

  • robc||

    It would be awesome if Wal-Mart offered a small amount of interest for money on the card.

  • np||

    Naturally, the U.S. Consumer Financial Protection Bureau is gearing up to regulate the pre-paid cards you.

    Remember this?
    Ice Cream Bank Alarms Pennsylvania Regulators

  • Pro Libertate||

    I could swear that Target was able to acquire a credit card bank (likely a industrial bank charter in Utah). Guess they aren't as scary as Walmart.

  • robc||

    Liberals will admit to shopping at Target.

  • NoVAHockey||

    wrong sort of white people at walmart. there are Targets in Arlington, VA -- the right sort of white people.

  • Spoonman.||

    Yep, we have a RedCard through them (5% off, why not) and it is through Target National Bank.

    Industrial bank charter in Utah? Huh?

  • Pro Libertate||

    I had thought that they had started with a South Dakota charter that was similar to the IB charter Walmart pursued in Utah. Those charters were often used for so-called credit card banks, which (I could be remembering this wrong, it's been a long while since I was in banking) didn't have demand deposits but could loan money and could hold money in the form of money markets and the like.

    However, this bank sounds like a national charter. And it appears to be controlled by Target. Crazy that they can have a bank but Walmart can't--I don't see the logic there at all.

  • ||

    I hate Walmart and like Target. Walmart offers an insufferable shopping experience whereas Target is clean, organized, has plenty of registers open, and doesn't have Walmart's train wreck customers. And now that I found Betty Crocker Pumpkin Spice cookies at Target, I never have to set foot in Walmart again. Hallelujah.

  • hotsy totsy||

    Me too, Bones!

    I once had a Democrat boyfriend who preferred Walmart, and argued that you'd find more Democrats at Walmart, and more Republicans at Target.

    Maybe because Walmart's logo is blue and Target's red?

  • Fatty Bolger||

    Now their attitude seems to be "screw it, death to banks."

    I lol'd.

  • sarcasmic||

    Regarding cheap Chinese shit at Walmart. Something I find curious.

    On the one hand Walmart is evil for putting Americans out of work by shipping manufacturing jobs overseas, but on the other hand every American is supposed to get a college education because manufacturing jobs are beneath them.

    Isn't there a contradiction there? Am I missing something?

  • Pro Libertate||

    That must be the objection to a Walmart bank--fear that they'll send the money to China. Or something.

  • ||

    See the video tarran posted above. That is actually what the lobbyist douche says.

  • Pro Libertate||

    Really? Maybe I have a new career option--making up shit to justify results I want.

  • NoVAHockey||

    that's not at all what lobbying is.

    there's also fundraising.

  • tarran||

    The guys arguing that Walmart needed to be stopped had a hysterically funny inability to make a coherent argument as to *why* they should be stopped.

    And yes, the argument that given Walmart started buying stuff made in China, who knows what they'll be doing with banking in ten years was made.

  • ||

    College has nothing to do with your occupation you fool!

  • ||

  • John||

    If there wasn't any manufacturing jobs, who would the little special snowflakes have to look down upon?

  • sarcasmic||

    I dunno, but my special little snowflake better get some scholarships or a trade, because there's no fucking way I'm paying for her college education. Especially considering what said education will cost a decade and a half down the road.

  • ||

    Ongoing debate in our household...how much to save for the flake. The figure I have in mind is about 50% lower than my spouse's. But is likely still way higher than average, so no one should be complainin'.

  • sarcasmic||

    Me and Mrs sarc agreed on zero as a nice round number.

  • Cyto||

    From the IBCA site - they claim that Wal-Mart fails 4 of the 7 criteria for FDIC insurance:

    1. adequacy of capital (to get to this they count all electronic transactions at Wal-Mart stores against the bank holdings)

    2. Risk to the Deposit Insurance Fund (a version of 'too big to fail', only in this case they claim Wal-Mart would be too big to be allowed to succeed. Strange for a group representing BoA and Citi, et. al.)

    3. General Character and Fitness of Management (they get sued by lefty activists a lot)

    4. Convenience and needs of the community (they divert capital away from local banks who would loan only in the local community - also strange for an organization that represents BoA and Citi, et. al.)

  • Pro Libertate||

    That's all bullshit, of course. Besides, if they were really freaked out, they could always create a federal charter for "banking" retailers or some other sort of nonsense.

  • Fluffy||

    A more naked and shameless example of corporate rent-seeking could probably never be found to top the banking industry's lobbying to keep Wal-Mart out of retail banking.

    In many ways it's worse than Solyndra-type scams.

  • Pro Libertate||

    By making government, rather than the marketplace, the focus of competition, much of the efficiency and pricing optimization of the free market disappears in a puff of lobbyist cigar smoke.

  • The Hammer||

    And that is what people like Liz Warren and Obama refer to as "market failure."

  • Pro Libertate||

    The Space Age was followed by the Information Age which was followed by the Cognitive Dissonance Age.

  • sarcasmic||

    Walmart's problem is that they save people money. By doing this their customers have money left to spend on other things. That's just not right.

    If they get into the prepaid card business, likely they'll do this at a lower cost to consumers just as they do with everything else. This will save people money, giving them even more money to spend on other things.

    This cannot be allowed. They must be stopped.

    Quick! Call the regulators! They'll fix it!

  • Rasilio||

    Ok there is a lot to hate about Wal Mart (and not the usual lefty claims about them employing slave labor, although there is a little something to that, more importantly they are one of the biggest corporate rent seekers out there and have an especially bad record on eminant domain abuse) but in this case they may just be taking on the one industry that is worse than them and so it is impossible not to root for their success in this endeavor.

  • John||

    Expect to see the usual law enforcement people doing a lot of pearl clutching over this. You see criminals can use cash to buy these things. How are cops supposed to steal, I mean seize, evil doers cash if they don't have to carry cash anymore?

  • Raston Bot||

    Obviously Wal*Mart is enabling money laundering with their new endeavor and must be stopped.

  • Anonymous Coward||

    I heard cops crying and bitching about Wal-Mart, and I shit you not in this, selling prepaid cell phones. The rationale being that the police could not possibly be expected to get another wiretap warrant every time a drug dealer or other malfeasor disposed of his prepaid cellphone.

  • John||

    Wait until Wall Mart gets into health care, if they haven't already. The thought of an evil corporation providing affordable basic care to poor people will eat liberals' souls.

  • sarcasmic||

    They're profiting off sickness!
    Walmart sucks profits from sick poor people through clinics!
    Poor people being forced to pay for health care at Walmart when it should be free!

    Oh the humanity!

  • NoVAHockey||

    they have. walk in service for routine and minor care. discounted prescriptions.

    http://www.walmart.com/cp/Walmart-Clinics/1078904

    FWIW, it'm a big fan of the clinic model for routine, minor care. makes way more sense than having people buy insurance for this stuff.

  • robc||

    Combine with an HSA and its exactly the right model.

  • NoVAHockey||

    I think so. my 3-part plan is

    1. pay for routine and minor
    2. insure against unexpected and catastrophic.
    3. save/plan* for end of life.

    *that third part is tricky and I have not figured out the best way to do that. but basically we need build assets over time that can be spent on end of life care or passed on to the next generation.

  • Rasilio||

  • np||

    Peter Schiff's offshore gold, full reserve bank: http://www.europacificbank.com/ (when prompted, choose I am not a U.S. Citizen)

    Silver, full reserve, Lakota bank: http://www.freelakotabank.com/

  • Loki||

    Naturally, the U.S. Consumer Financial Protection Bureau is gearing up to regulate the pre-paid cards.

    Yeah, of course they are. We can't have someone actually providing a financial service to people, especially lower income folks, that they might want. Especially if that someone is an icky KORPORASHUN like Wal-Mart.

  • Mo||

    Isn't Amex the bank here?

  • Bruce Majors||

    Reason covers this topic better than most but it is always assumed that only poor people have cash flow problems and make use of these loans. I know realtors get solicited constantly by companies that give you advances on commission for a hefty fee. I assume other commission based sales people do as well. See for instance http://www.netadvance.com/

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