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By Catholic Online (NEWS CONSORTIUM)

11/28/2011 (3 years ago)

Catholic Online (www.catholic.org)

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.

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.

Highlights

By Catholic Online (NEWS CONSORTIUM)

Catholic Online (www.catholic.org)

11/28/2011 (3 years ago)

Published in Business & Economics

Keywords: Wal-Mart, MoneyCard, debit card, banks, fees


LOS ANGELES, CA (Catholic Online) - Customers are able to get a prepaid debit card that they can reload at their convenience. To encourage the use of the card, free direct deposit is also available, and comes with a $10 bonus. In addition, the card requires no credit check or bank account. There is also no chance of overdraft fees, as one enthusiastic user says, "You can't spend what you don't have, so you can't go over. You don't get in trouble with it."

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.

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