Wal-Mart launches own money-transfer service

Wal-Mart has launched its own money-transfer service, taking a step towards becoming one of the biggest financial services providers in the US.

With the service, dubbed Walmart-2-Walmart, customers can transfer funds between any of its 4,000 US locations, allowing the big-box retailer to claim a piece of the money transfer market currently shared by Western Union and MoneyGram.

The recipient can access the money with a personal identification number with Wal-Mart charging $4.50 for any transaction under $50 and $9.50 for larger transfers up to $900, which works out much less than MoneyGram's, with Walmart-2-Walmart outlets inside Wal-Mart stores across the country.

''After listening to our customers complain about the high fees and confusion associated with transferring money, we knew there had to be a solution,'' said Daniel Eckert, senior vice president of services for Walmart US. ''Walmart-2-Walmart brings new competition and transparent, everyday low prices to a market that has become complicated and costly for our customers. We're doing what we do best – launching a new service that challenges the status quo and drives down prices for our customers.''

The Washington Post quoted Daniel Eckert, vice president of financial services for Wal-Mart US as saying in a call with reporters that the retailer was leveraging its size and its scale to make a difference customers.

According to officials at Wal-Mart, the new service would have broad appeal among the ''unbanked'' and ''underbanked,'' the 28 per cent of Americans having limited or no access to the traditional banking system.

That population tended to use alternative financial firms such as check cashers that also offered bill pay and money order services. The retailer had over the years tried to siphon off those customers by providing the same products at lower rates.

Shares of MoneyGram and Western Union dived immediately following the announcement.

According to The Associated Press, though MoneyGram could not be reached immediately for comment, in an email statement, Western Union said, "Our retail product and service offerings today are already quite diverse."

Western Union noted that people had the flexibility to send money in minutes or next day from a retail agent location or online and they could also send money directly into a bank account.

"The company is well positioned in the US domestic money transfer space, having offered a fee of $5 for $50 since 2009," it added.

Wal-Mart had been trying to ramp up foot traffic after comparable-store sales registered four successive quarterly declines.

Walmart also offers other everyday money services such as check cashing, bill pay, money orders and tax preparation services, as well as industry-leading pre-paid card programs though the Walmart MoneyCard, and Bluebird, a checking and debit alternative.

These services – and Walmart-2-Walmart – are available at the Walmart MoneyCenter or Walmart's customer service desks. 

According to commentators, with Walmart-2-Walmart service the trend might be halted, giving customers just one more reason to spend more time inside Wal-Mart.