For millions of Americans who don‘t have a traditional bank account, cashing a check or sending money to a loved one often means paying hefty fees. But what if they could access basic financial services while picking up groceries and household essentials at everyday low prices? That‘s the promise of Walmart‘s growing array of banking products, which are bringing a new level of convenience and affordability to underserved populations.
Over the past two decades, the world‘s largest retailer has quietly assembled a formidable financial services arm that spans credit cards, prepaid debit cards, money transfers, bill payments and even small business loans. While Walmart doesn‘t have a bank charter, it‘s leveraging its unparalleled physical footprint and economies of scale to offer banking products at a fraction of the cost of traditional players.
"Walmart has a unique opportunity to serve unbanked and underbanked customers by providing low-cost, transparent financial services in stores they already shop at," said Bob Hedges, a senior financial services analyst at Mercator Advisory Group. "For many lower-income individuals, Walmart is effectively acting as their bank."
Walmart‘s Financial Services, By the Numbers
Just how big is Walmart‘s banking business? Here are some key statistics that underline its massive scale and reach:
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Walmart offers three credit cards — the Walmart Rewards Card, the Walmart Mastercard and the Capital One Walmart Rewards Card — which have a combined 19 million active accounts as of 2021, according to a company filing.
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The Walmart MoneyCard, a reloadable prepaid Visa card, has 2 million active accounts and processes over $18 billion in transactions annually, according to Green Dot, the card‘s issuing bank. Customers loaded $9.5 billion onto MoneyCards in 2021, up 13% from 2020.
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Walmart2Walmart, the company‘s domestic money transfer service powered by Ria, processed $13 billion in payments volume in 2021, representing 81 million transactions. Walmart2World, which enables money transfers to 200 countries, processed $6.5 billion across 24 million transactions.
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Walmart stores cashed 78 million checks worth $17.4 billion in fiscal 2021, according to internal data reported by Business Insider. The company charges a flat fee of $4 for checks up to $1,000 and $8 for checks above $1,000, undercutting many rivals.
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In 2021, Walmart teamed up with fintech startup Affirm to offer buy now, pay later financing for online purchases over $144. Two-thirds of customers who used the service said they wouldn‘t have made the purchase otherwise or would have used a credit card, according to Affirm.
These numbers paint a picture of a financial services operation with remarkable scale, reach and momentum. Walmart‘s retail prowess enables it to drive awareness of and cross-sell financial products to its 240 million weekly global customers. By integrating banking into its core business, Walmart is creating a flywheel effect that boosts customer loyalty and lifetime value.
Banking on the Unbanked
Walmart‘s push into financial services is aimed squarely at the estimated 7 million U.S. households that are unbanked and 43 million that are underbanked. For this population, many of whom live paycheck to paycheck, accessing basic banking can be costly and inconvenient.
"Residents of low-income neighborhoods often face a double whammy when it comes to financial services," said Brad Hauser, a retail and consumer banking consultant at Hauser Consulting. "Not only are bank branches scarce, but the ones that do exist often charge high fees for services like check cashing, money orders and prepaid cards."
Consider that cashing a payroll check at a bank can cost up to 5% of the check‘s face value, or $25 on a $500 check. By contrast, Walmart charges a flat fee of $4 for checks up to $1,000, representing a savings of up to 80%. For someone earning minimum wage, that extra $20 could cover a few meals or a tank of gas.
Similarly, using a prepaid debit card from a convenience store or check casher often comes with a slew of nickel-and-dime fees, including charges for activation, loading money, making purchases, checking balances and even inactivity. These fees can add up to hundreds of dollars a year for users.
The Walmart MoneyCard, by contrast, has no monthly fee if customers direct deposit at least $500 per month. Cash reloads are free at Walmart registers, as are withdrawals at in-store ATMs. There‘s no overdraft fee and customers can even earn 3% cash back on online Walmart purchases.
"For millions of unbanked Americans, the Walmart MoneyCard is the closest thing they have to a checking account," said Hedges of Mercator Advisory Group. "It offers many of the same functionalities – direct deposit, bill pay, mobile check deposit, etc. – without the costs and restrictions of traditional bank accounts."
Even middle-class customers who have bank accounts are turning to Walmart for certain financial tasks. A 2019 survey by consultancy Cornerstone Advisors found that 1 in 5 U.S. consumers used a Walmart financial service in the past year, including 37% of Millennials and 43% of Gen Xers. The top reasons cited were convenient locations, low costs and ease of use.
Regulatory Hurdles and Competitive Threats
Of course, Walmart‘s foray into banking hasn‘t been without controversy or setbacks. The company‘s attempts to obtain a specialized bank charter in the early 2000s were met with fierce resistance from community banks, labor unions and watchdog groups who warned it would create an unfair playing field and concentrate too much power in the hands of one corporation.
"Walmart‘s bid for a bank charter would have allowed it to transfer capital and resources between its retail and financial operations in a way that smaller banks could never match," said Brian Depew, executive director of the Center for Rural Affairs, a nonprofit that opposed the application. "It would have posed a grave risk to the financial system and undermined fair competition."
While Walmart ultimately withdrew its bids for a charter in 2007, the regulatory climate has since shifted in its favor. In 2020, the Federal Deposit Insurance Corporation (FDIC) approved a final rule that makes it easier for non-financial companies to obtain industrial loan company (ILC) charters, paving the way for them to offer banking products without the full regulatory scrutiny applied to traditional banks.
Still, Walmart continues to face skepticism and scrutiny from certain quarters. In 2022, several Democratic senators sent a letter to the Consumer Financial Protection Bureau (CFPB) urging closer supervision of Walmart‘s partnership with fintech firm Ribbit Capital, which aims to develop new digital financial offerings for Walmart customers and employees.
"We are deeply concerned by Walmart‘s proposed joint venture given the company‘s history of consumer abuses and broken labor practices," wrote Senators Elizabeth Warren, Bernie Sanders and three others. "Walmart poses a real danger to its customers and workers by offering predatory financial products."
Walmart counters that its financial services empower customers by expanding access and lowering costs. "For years, millions of customers have put their trust in Walmart to not only save them money when they shop with us but help them manage their financial needs," said Julia Unger, vice president of financial services for Walmart. "And they‘ve made it clear they want more from us in the financial services arena."
Beyond regulatory issues, Walmart also faces stiff competition from incumbent banks and insurgent fintechs alike that are vying for a piece of the retail banking pie. Rivals like J.P. Morgan Chase, Wells Fargo and Bank of America have invested heavily in mobile banking capabilities and physical branch expansion in a bid to retain customers. Meanwhile, digital banks like Chime, Varo and Current are targeting underbanked populations with low-fee, mobile-first products.
Walmart is betting that its hybrid digital/physical strategy will prove a competitive advantage. By combining an extensive store network with emerging technologies like mobile apps, QR code payments and buy now, pay later, the company aims to meet customers where they are with frictionless financial solutions.
"We‘ve designed products grounded in what our customers said they want – no overdraft fees, no monthly account fees, and low minimum balance requirements," said Daniel Eckert, senior vice president of Walmart Services & Digital Acceleration, in a 2021 interview. "And by leveraging our more than 4,700 stores, scale and existing relationships with customers, we can provide products at everyday low prices other institutions can‘t match."
The Future of Retail Banking?
As Walmart‘s financial services portfolio grows in size and sophistication, it‘s natural to wonder just how far the company intends to push into banking. Will it continue to partner with licensed lenders and fintechs or eventually seek a charter of its own? Could the Supercenter of the future basically double as a bank branch?
According to some experts, Walmart‘s endgame is not to replace banks but to reimagine retail financial services for the digital age. By embedding basic banking functions into its core retail experience – whether in-store, online or in-app – Walmart aims to remove friction, lower costs and deepen customer relationships.
"Walmart isn‘t trying to be a bank in the traditional sense," said Brendan Witcher, vice president and principal analyst at Forrester Research. "It‘s trying to be a one-stop shop that meets all of its customers‘ needs, including financial services, in a seamless and affordable way."
In a 2021 CNBC interview, Walmart CEO Doug McMillon hinted at the company‘s long-term ambitions, saying: "Customers have been clear that they want more from us in terms of financial services and this new approach will help us deliver for them in a differentiated way more quickly."
As consumer preferences shift toward digital-first, integrated experiences, Walmart‘s approach to financial services could be a harbinger of the future of retail banking. By leveraging its brand trust, customer data and physical scale, the company is uniquely positioned to offer simple, transparent products that meet customers where they are.
To be sure, Walmart‘s banking experiment is still in its early innings and faces plenty of risks and unknowns. Regulators may clamp down on conflicts of interest, privacy breaches or predatory practices. Economic downturns could strain Walmart‘s balance sheet and force it to pull back on financial offerings. Competitors could outflank Walmart with superior products or lower prices.
But if Walmart gets it right, its model of retail banking could become the norm rather than the exception in the years ahead. As the lines blur between commerce and banking, more retailers may seek to launch their own financial products to boost loyalty, gather data and diversify revenue. Traditional banks, in turn, may partner with or acquire retailers to expand distribution and embed their services into popular consumer platforms.
"The future of banking is going to be much more embedded, contextual and distributed," said Witcher of Forrester Research. "Walmart is one of the few companies with the scale, data and customer trust to really drive that forward."
So while Walmart might not be a bank in the literal sense, it‘s certainly acting like one in many ways that matter to consumers. And in doing so, it‘s challenging long-held assumptions about what a bank is, what it does and who it serves. As the saying goes, if it walks like a bank and talks like a bank, maybe it is a bank – even if it‘s hiding in plain sight behind a yellow smiley face.
