Many Wal-Mart locations around the country now have Money Center departments. These developments create an incredibly convenient way to take your paycheck into the store, have it cashed at the Money Center, and use your cash for your shopping trip. With Wal-Mart’s trend to become a one-stop shop for all household needs, including groceries, each Wal-Mart location is becoming its own small mall — or even village.

The Wal-Mart Money Centers are not full banks. They offer check cashing services, bill payments, outgoing wires, and reloadable debit cards. There are no checking accounts or savings accounts. Wal-Mart abandoned its plans to become a bank, and in doing so, is able to offer certain financial services while not being held to the same regulations as Chase, Bank of America, or your local bank branch. On the spectrum of financial institutions, Wal-Mart Money Centers are closer to establishments like payday loan companies and check cashing storefronts, who charge high fees and cater to lower-income communities and the unbanked population, than the centers are to banks.

Check cashing fee. The good news is that the fees for cashing your paycheck or government check are generally much lower than the fees at shadier establishments. At the Wal-Mart Money Center, you can cash your check for a 1 percent fee with a maximum fee of $3. Of course, you can cash your checks for free at a bank.

Prepaid debit card fee. The fee to reload and maintain your prepaid debit card is lower than fees for prepaid debit cards elsewhere. Wal-Mart uses GreenDot prepaid debit cards, but at reduced rates of $3 to load and $3 per month to maintain. This is a system designed to charge people with low credit scores or a poor history with banks fees to use their own money. These are fees that middle-income banking customers doesn’t need to pay, particularly now that big banks have backed away from charging monthly debit card fees.

According to Wal-Mart’s own survey, 60 percent of the customers using the Money Center have bank accounts. These customers are most likely more interested in the convenience, and willing to accept the fees in exchange for getting access to their money at the same location they shop. The remaining 40 percent must be the reason Wal-Mart chose to offer its own check cashing service rather than extending a potentially lucrative contract to a bank that could theoretically operate a branch in every Wal-Mart location.

Are these new services good for the people of Wal-Mart? I’m having trouble finding a significant drawback. I believe it would be better if Wal-Mart were to offer more traditional banking services, but this system is more profitable. The temptation to spend more money when you receive cash from your employer’s paycheck in the store where you’ll be spending money could be an invitation to spend more than necessary, but if you’re spending with cash, at least you’ll be limited to spending only what you have on hand. At the same time, Wal-Mart’s Money Centers offer a better choice than payday loans and check cashing storefronts for lower-income families or the 40 percent of customers who do not have bank accounts, and could possibly help these households transition to a bank in the future.

I do not see Wal-Mart centers as an alternative to banks for most existing banking customers. There is anger towards Wall Street and the banking system, and initiatives like Bank Transfer Day encourage people to move away from the big banks towards credit unions and community banks. The Wal-Mart Money Center is not a replacement for a big bank, and moving a family from managing finances through a bank to managing finances on an all-cash basis through an outfit like these could be detrimental to long-term financial stability.

Photo: aforero
New York Times

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Almost ten years ago, the government passed a law that made electronic images of paper checks just as legitimate as the paper checks themselves. As banks implemented the law, it saved time and money by allowing banks of first deposit to scan checks after a customers deposit them for verification with the originating bank. With an image of a check being accepted in place of a paper check, more banks have begun implementing a convenience to customers as well.

Businesses were the first customers to receive these benefits. For a business that receives thousands of checks every day, bringing the physical paper checks to a branch for deposit can be an expensive and time-consuming process, fraught with the possibility of security problems with the checks in transit. Banks have offered business the option of remote deposit. With this service, the customer can scan checks using a specialized imagine device (check scanner) and transmit the images securely over the Internet or a private network connection. The funds are then available immediately rather than overnight.

With this success, banks are in the process of extended similar features to non-business customers. With the proliferation of cell phones with built-in, high-megapixel camera, banks can now offer deposits using snapshots of checks sent via text message or custom smartphone apps. For these customers, no bulky desktop scanner is necessary, and there’s no need to be home to make the deposit. You can effectively deposit checks from your mailbox down the street or from your grandmother’s house on your birthday.

Business customers still have the advantages, with very few banks actively offering this service to non-business customers. The number of banks offering this service to consumers is increasing, however.

Remote deposit is most useful for banks that don’t have local branches, like these online banks. ING Direct, still bloggers’ most favorite bank, is working to implement remote check deposit soon, but with the bank’s planned acquisition by Capital One it’s unclear when new features will be added. ING Direct recently began offering paper checks to customers, so remote deposit capture may not be too far behind.

Chase Bank offers apps for iOS and Android devices. The application allows customers to log into their bank accounts. To deposit a check, take a picture of the front and back, and send the images securely to Chase using the application. The deposit will be recorded as pending immediately, though availability will depend on the bank’s typical schedule, usually next business day availability for local checks. The availability schedule has several variables, though, so always check with the bank to determine when the funds you deposit will be available.

Ally Bank has offered remote deposit for customers since April 2011, but the bank has just recently opened the program to all customers. Ally’s eCheck Deposit service requires a scanner and some manual work, such as inputting the check amount (shouldn’t this be automatically read when scanned?) and aligning the images. Ally plans to offer a mobile application soon.

The USAA Bank mobile application for iOS, Android, and Windows Phone 7 includes a feature allowing remote deposit. Deposit@Mobile requires the customer to enter the check amount, take one photo of the front of the check and one photo of the back, and submit the images to the bank through the application. The bank will confirm the deposit amount.

Have you used your bank’s remote deposit service? If so, what did you think of the experience?

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As consumers grow increasingly frustrated by the checking account options offered by traditional banks, more are seeking out the best online checking accounts for better interest rates and service. Large banks like Wells Fargo and Bank of America are continuing to add fees, such as debit card fees, and are not concerned with scaring the less profitable customers away. This is part of a larger plan to increase profitability, which includes firing the customers who don’t have large balances and sending them to online banks, small banks, and credit unions. If these customers remain unprofitable at their new institutions, those organizations may be forced to enact fees, as well.

Regardless of the larger situation, including industry-directed changes and regulations, the best thing a customer can do is find the best checking account that meets his or her needs at that particular time, with the information that is currently available. Here are my picks for stable, convenient online checking accounts.

Ally Bank. Ally Bank (formerly GMAC Bank) offers a checking account with no monthly fees and no minimum balance. The no-fee, no-minimum accounts are becoming increasingly rare, and even those banks that have held out with these accounts, very few offer interest on the accounts, as Ally Bank does.

PerkStreet. PerkStreet takes a unique approach to checking, offering cash back for using an associated debit card. Cash back in a world where other banks are charging to use their debit card is a novel idea. For now, customers with a PerkStreet account earn 2% cash back on all debit purchases and an additional 3% cash back, for a total of 5% cash back, on rotating categories throughout the year.

There are some limitations to this cash back; the 2% cash back is effective for the first 90 days or for accounts with at least a $5,000 balance. Otherwise, the cash back rate is 1%. The 5% offered on rotating categories expires after a customer ha earned $250 in cash back from that tier.

Perkstreet’s checking account is a finalist in its category for the 2nd Annual Plutus Awards.

ING Direct. The ING Direct “Electric Orange” online checking account has been my primary online checking account for almost as long as the account has been offered by the bank. To catch up with other online offerings, ING Direct recently began offering paper checks. Like Ally, this account charges no fees, requires no minimum balance, and offers interest to account holders. Rather than overdraft coverage from a linked savings account, the Electric Orange account takes advantage of a line of credit offered to approved customers.

FNBO Direct. FNBO Direct offers a savings account with a competitive interest rate, and the Online BillPay Account is a competitive offer as well. FNBO offers a high interest rate on their BillPay Account and integrates PopMoney, a system that allows you to easily transfer money to and from your friends (or anyone else who uses PopMoney).

I’ve had an FNBO Direct savings account for a long time, and it has consistently offered high rates.

USAA. USAA is taking advantage of banks charging $5 debit card fees, heavily advertising that their debit card is free to use. The USAA checking account is certainly a favorite among experts, earning its place as a finalist at the 2nd Annual Plutus Awards. USAA was also named one of CNN Money’s least evil banks.

The bank serves primarily members of the military, but membership is open to the public. The checking account has no fees and does not charge for up to the first 10 AM withdrawals each month. USAA also reimburses customers for up to $15 in ATM transactions each month, making any convenient location an “in-network” ATM. USAA also offers remote deposit, a convenient way to deposit checks into the account by scanning or taking a photograph of both sides of the check.

With the largest banks finding ways to eliminate the least profitable customers through the addition of fees, as of today, there are still plenty of options available for people who are interested in sticking with an institution that generates revenue in another manner. If the above options don’t work for you, there are credit unions that would be happy for an influx of customers. Every financial institution is a business, however, and if new customers end up being unprofitable in the future, free checking will become extinct.

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