Wal-Mart Making Inroads Into Financial Services Market
A new report from Aite Group takes a look at Wal-Mart’s (NYSE: WMT) progress in expanding into financial services, notably in providing cash-checking services to its customers.
Over the last few years, U.S. retailers have developed an interest in providing alternative financial services – including check cashing, general purpose prepaid cards, money order purchase and bill payment – to unbanked and underbanked consumers. Perhaps none has been as successful as Wal-Mart. Among regular check cashing store customers, 92% shop at Wal-Mart at least once per three-month period. Still, less than half of the surveyed population cash checks at Wal-Mart stores, with most preferring traditional check cashing centers due to a perceived convenience.
Our analysis indicates that Wal-Mart has 11% market share among check cashing store users in the United States today.
In the check cashing space, Wal-Mart is now a force to be reckoned with. Aite says. Still, the value proposition of regular check cashing stores remains very strong relative to Wal-Mart’s MoneyCenters:
- Authorization. Because Wal-Mart uses a third-party authorization provider, we suspect that its enrollment approval rates, new customer transaction approval rates, and repeat customer transaction approval rates are lower than what’s typical at check cashing stores.
- Location. The “speed advantage” offered by check cashing stores is due not only to the time involved processing the actual transaction, but also to the store location itself and to the convenience of getting in and out of the store quickly.
- Parking. While Wal-Mart’s pricing may be attractive, the parking logistics and in-store experience may make a trip to the store for check cashing a more time-consuming errand than a trip to the check cashing store. At the present time, the transactional cost-savings may not be worth the incremental time — whether the time difference is perceived or real.
You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
