Walmart gets into money transfer market

Walmart is launching a new money transfer service in its stores in its latest effort to attract more customers who do not have bank accounts or balk at bank fees.

The announcement triggered a sharp drop in the share prices of MoneyGram, which has a transfer service that available in some Walmart stores, and Western Union, another rival service.

The world's biggest retailer by sales is offering the US-only service, called Walmart-2-Walmart, in alliance with Ria Money Transfer, a group that is part of Nasdaq-listed Euronet Worldwide.

Low-income Americans are Walmart's core customers and many make limited or no use of traditional financial services, either because they have weak credit scores or do not want to pay bank fees.

Daniel Eckert, senior vice-president of services for Walmart US, said on Thursday that members of the military and oilfield workers were particularly reliant on existing money transfer services.

"After listening to our customers complain about the high fees and confusion associated with transferring money, we knew there had to be a solution," he said.

Walmart's new service enables customers to send money to relatives or friends who can collect the funds at another Walmart store by providing a password and identification.

Meanwhile, Facebook is also readying itself to provide financial services in the form of remittances and electronic money.

Walmart will charge fees of $4.50 for transfers of up to $50 and $9.50 for transfers of up to $900, the maximum sum permitted. But its service will not link up with Ria's global network.

MoneyGram shares fell 15 per cent to $15.32 after Walmart's announcement on Thursday morning.

Mr Eckert said: "MoneyGram continues to be a very valuable partner for us and our customers. What the introduction of Walmart-2-Walmart does is provide some additional choices for our customers."

He noted that MoneyGram enabled overseas transfers and transfers of more than $900.

Over the years, Walmart has rolled out a variety of new services including pharmacies to opticians in its stores as it seeks fresh ways to attract customers, an imperative as the amount of shopping online increases.

In 2012 Walmart launched a card-based quasi-bank account called Bluebird with American Express. Some of its previous efforts to get into banking - including an abandoned bid to acquire a banking licence in 2007 - have triggered fierce opposition from some US lawmakers and community banks wary of its power.

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