If banks weren’t in enough trouble, there’s another threat on the horizon. Wal-Mart is encroaching on the banking industry by providing more financial services to its millions of customers.
The giant retailer has partnered with other companies to offer consumers money transfers, check cashing and bill payment services, and virtual checking accounts in the form of refillable, pre-paid debit cards, said CNN.com.
Wal-Mart has tried several times in the past to acquire its own banking license but failed. Now Wal-Mart is seeking regulatory approval to acquire a small Utah-based bank for $15.7 million, according to CNN.com.
Last week the company opened its 1,000th “Money Center” and has plans to open 500 more. Wal-Mart has operated a bank in Mexico since 2007. After receiving a banking license in Canda last month, the company has rolled out a new Wal-Mart credit card.
In addition to making money on banking fees, Wal-Mart encourages customers to shop at the store by offering cash-back incentives and other deals.
The company believes it can provide alternative banking services to at least 25 percent of the U.S. population, noting that 28 million people in the country don’t have a bank account.
“Wal-Mart is going to accelerate the evolution of the banking industry,” Anthony Plath, a finance professor at the University of North Carolina, told CNN. “They would be a different kind of bank, but the kind of bank the industry may need right now.”
This article was submitted by Rohit Arora, co-founder of Biz2Credit. Biz2Credit is a small business marketplace that connects entrepreneurs with financing options and advice to grow their business. Send all questions to