Wal-Mart MoneyCard attracts those without banks, or hate fees
Nation's largest retailer attracting more people disenchanted by banks
Americans are very nonplussed with their banks these days. There are
lots of fees, both upfront and hidden - and they're only going up in
price. The nation's largest retailer, Wal-Mart, has reflected that
growing disenchantment with their MoneyCard, a prepaid debit card with a
flat $3-a-month fee.
Wal-Mart MoneyCenters offer a range of financial services, including affordable check cashing, options for bill payments and overseas wire transfers, all in addition to prepaid debit cards.
The MoneyCard is part of Wal-Mart's push into the financial services sector. The company sees this as a rich, untapped field. There has been a recent outpouring of anger for big banks. Most noticeably, current consumer dissatisfaction was best expressed after Bank of America announced plans this fall to charge depositors a monthly fee to use their debit cards for purchases, in addition to the overdraft and other charges frequently incurred. Bank of America withdrew that strategy after high customer complaint.
The use of prepaid debit cards has already been on the rise for several years. In 2009, research firm IBISWorld estimated the value of the market to be between $50 billion and $160 billion. Consumers Union issued a report titled "Prepaid Cards: Second Tier Bank Account Substitutes" in September of 2010, in which researchers connected consumers' decisions to switch to such cards with recession-related uncertainty. The report also noted that prepaid debit cards were still high cost, often carried confusing fees and offered little or no protection for customers' funds.
Wal-Mart has since addressed the fee issue and is attracting significant numbers of the unbanked with its MoneyCard.
The Federal Reserve estimates that 60 million Americans, or one fifth of the nation deal primarily in cash. An expert on the debit card market told radio journalists that he thought there were at least two million active MoneyCards. While Wal-Mart did not succeed in obtaining a federal bank charter, its MoneyCenters offer a range of financial services, including affordable check cashing, options for bill payments and overseas wire transfers, all in addition to prepaid debit cards.
The market for these cards may have begun among low-income workers and the unemployed in the midst of a recession, but they could well prove popular enough to stay in widespread use even if the economy improves.
© 2011, Catholic Online. Distributed by NEWS CONSORTIUM.
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