It looks as if it’s time for the legendary powerhouse money transfer services of Western Union and MoneyGram to either move over or step up their game. Another industry tycoon is gearing up to come in and take them both on, offering lower fees and a branded name to back it up. You guessed it… Wal-Mart.
As recently reported by the Chicago Tribune, Wal-Mart is launching their own money transfer service—“Walmart-2-Walmart”—which will permit shoppers to send and receive cash from both family and friends at the more than 4,000 stores across the United States and in Puerto Rico. Offered at a lower rate than competitors, Wal-Mart claims the new service will “cut fees by up to 50% compared with similar services elsewhere,” according to USA Today.
As it sits, the Walmart-2-Walmart service—which will not be offered online or throughout international stores—will allow customers to “transfer up to $50 for a fee of $4.50, compared with between $4.75 and $5 at rival services,” states the Tribune. Customers will be limited to $900 a day unless more is required, in which case additional information must also be provided by the customer.
So, why the initiation of Walmart-2-Walmart? Daniel Eckert, Senior Vice President of Services for Wal-Mart, admits that company officials had received an earful of complaints from customers about high fees elsewhere in related services. Therefore, the decision was made to take another stab at the financial services market from within.
With that, while the supposed goal is to offer shoppers more choices in their financial options, another added bonus that cannot be overlooked is the fact that bringing in such services will drive more people to Wal-Mart… perhaps tempting them to spend some of that money in the actual store. Maybe another reason the service is not offered online?
When approached about the news, Western Union stated confidently that its place in the industry is “well-positioned.” However, as true as that is, following the announcement of Walmart-2-Walmart, shares of Western Union went down 4%, while MoneyGram plunged 15.6%. So we can’t say people aren’t eager to see what Wal-Mart has “in store”.
This isn’t the first attempt the tycoon has made to get into the financial services game. Back in 2007, Wal-Mart applied for a bank charter but retracted after some disapproval from both banks and labor unions. Yet with this new service, it appears the corporation is ready to take a full swing at cornering yet another market.
