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Wal-Mart Offering Check Cashing Services

This article was written by in Banking. 9 comments.


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.

Wal-MartCheck 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

Published or updated November 10, 2011. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 9 comments… read them below or add one }

avatar Money Beagle

They most likely have lower prices because they expect (and rightly so) that a good portion of people will stick around and buy stuff with the cash in their wallet.

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avatar Ceecee ♦53 (Newbie)

It sounds like a good thing for the people who have no bank account and need to cash checks. Hopefully they won’t spend it all in one place—-Walmart!

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avatar Krantcents

Before I read your post, I thought they would do it for free or a very low cost, if you spent the money in the store. To me, that waould be good marketing and firt with their low cost image.

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avatar wylerassociate ♦162 (Cent)

It’s a smart business move by walmart as they add more services that keep customers in their store & spend more money. I would pass on cashing my checks at walmart.

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avatar Cejay ♦1,521 (Half-Dollar)

Judging from the people I see at the local WalMart and the customers at my job this will be their first stop. I rember with my first job I had no checking account and so I would go to Kroger and cash my check and buy the supplies for lunch the next week. There was no charge with a Kroger card. I guess those times are gone.

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avatar qixx ♦1,895 (Half-Dollar)

I remember doing the same at Fred Meyer (owned by Kroger). Now i always deposit my checks instead of cashing them. Easier to track doing so and spending with credit/debit.

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avatar DivaDancing14 ♦113 (Cent)

This is really nice if you have a check with you and need some quick cash to buy a present or a needed item for your home! I really like how wal-mart is coming up with such smart and helpful ways to help there buyers :) That way they will receive positive feed back! :D

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avatar prt1984 ♦117 (Cent)

I have to say $3.00 is alot better than most places with walmart you can buy food you need after cashing your check.I think if they did it for free that they would have alot more people buying from them especially the holidays .

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avatar shellye ♦107 (Cent)

Well, they are the “Low Price Leader” – the check cashing fees seem very reasonable. In fact, they’re cheaper than most banks (and credit unions, believe it or not). The Green Dot card has been around for a while, and I don’t think it’s that good of a deal, it appears to fill a need for a lot of people.

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