Walmart is coming out with its own mobile checking account with a linked debit card program for customers. The service is called GoBank, and will be operated by Green Dot Corp.
The program will entice customers to switch over from their current banks as GoBank has low-costs and will not charge overdraft fees or other fees associated with not meeting a minimum balance.
The membership fee is $8.95. However, this fee is waived if customers directly deposit at least $500 into the account every month – something many people will probably be capable of doing.
According to company officials at Bentonville, Ark., customers will also be able to put cash into their accounts at certain stores and deposit checks by using their smartphones.
A pilot program was offered in a small number of Walmarts early last year, where Green Dot Bank was test-marketing the GoBank program.
An announcement was made on Wednesday, stating that GoBank will be available in nearly all of Walmarts locations (approx. 4300) by the end of October.
Walmart has had experience in starting its own bank before, though they were all rather unsuccessful efforts. It currently has financial service officers called Money Centers in many of its stores, with features such as cash checking, money wiring and bill payments.
However, GoBank will be Walmart’s first federally insured bank. People will be able to pick up their starter kits at stores and open their account with a $2.95 opening fee.
The move suggests that Walmart is trying everything it can to lure in more customers to its stores, and keep them shopping at their stores.
isThrough this tactical move the retail giant is beginning to “serve the needs” of more consumers and emerging as a full service company. The chain has had lackluster U.S. sales recently and its earnings forecast for the fiscal year was recently cut.
Ron Friedman, a retail expert at consulting and accounting firm Marcum, said:
“Walmart is becoming a financial institution. They are trying to be a full-service company. Customers come in to put money on the debit card and stay to shop in the store.
“As the economy has gotten better, the upper-scale customers have gone to better stores, leaving customers who are lower-middle-class to lower-class behind.”
A Green Dot spokeswoman, Sharon Pope, said that GoBank will not allow transactions that exceed what’s in the account. However, in the event of a transaction exceeding what’s in the account, the account will only be frozen until the difference is made with deposits – no more $35 overdraft fees.
The CEO of Green Do, Steve Streit, said that applicant’s identities will be verifies and run through a a proprietary credit checking system, which is less likely to reject those who have run into credit trouble in the past because of unpaid overdraft fees.
The company also expects to attract tech-savvy consumers who are familiar with mobile banking and see the benefits of the low fees.
A senior vice president for sales at Walmart, Daniel Eckert, said that a recent study revealed that overdraft and other bank fees associated with traditional bank accounts can cost people up to $300 a year.
Eckert said that banking fees are “a real expense for them, and it puts a real pinch in their pocket.”
“This product is really designed toward Walmart shoppers who find themselves dissatisfied or unhappy with the fees and costs associated with traditional banking, as well as customers with a spotty record of managing their account.”