Wal-Mart announced today that it plans to offer a prepaid, reloadable Visa debit card as part of a plan to expand the financial services it offers to its customers, millions of whom do not have a basic banking or checking account.
The new debit cards are called MoneyCards. While not a checking account, MoneyCards will act just like one, allowing shoppers to use the debit cards wherever VISA cards are accepted.
Instead of paying by cash or money orders, customers can use the MoneyCards to pay electric bills, buy gasoline or shop for groceries.
Shoppers will pay an initial onetime fee of $8.94 to purchase the card. Then, each month, card holders will be charged a monthly maintenance fee of $4.94.
Wal-Mart will waive that fee if card holders deposit a least $1,000 each month into the card account at a Wal-Mart store or at a Green Dot location or through direct deposit of their paychecks. Wal-Mart said that the average weekly paycheck it cashes is $350. The company estimates that one out of five of its customers do not have a checking account.
The world's largest retailer partnered with GE Money -- a division of General Electric Co.-- Visa and Green Dot to offer the debit card. Wal-Mart plans to roll out the card in 1,300 stores by the end of June and expects it will be available nationwide by the end of the year.
Customers will have to pay extra fees to add additional funds, but that can be waived if customers sign up for direct deposit or if they deposit checks cashed at Wal-Mart directly into the MoneyCard account.
The deposited funds are insured by the Federal Deposit Insurance Corporation and card holders will not be responsible for unauthorized purchases made on the card if it is lost or stolen.
According to the Financial Service Centers of America, a trade group representing over 6,500 businesses that provide services such as check cashing money orders and wire transfers, prepaid debit cards have been popular choices for those consumers outside of the traditional banking system.
Many of its members offer the NetSpend All Access card for a onetime fee of $9.95, though a spokesperson with the trade group told ABC News that some businesses waive the fee.
The nationwide roll-out of the MoneyCard was part of a larger announcement the company made about its financial service offerings.
Wal-Mart said today that it would expand its MoneyCenters from 225 locations to 1,000 by the end of 2008. These stand-alone centers have the look of traditional retail banks and are usually found near the entrance to the stores. They offer services such as check cashing, money orders, bill payments and money transfers.
In a statement, the company said, "The rapid expansion of its low-cost money services and in-store locations will help meet the needs of the millions of unbanked and underserved customers who visit Wal-Mart each week for their basic money service needs."
Already, more than 2 million customers use Wal-Mart's existing money services each week. The company said it saves shoppers who use all of its services $450 a year compared to fees charged by competitors. For example, Wal-Mart said it charges 66 cents for bill payments, compared to $1.00 competitors charge.