In partnership with the prepaid card firm Green Dot Corporation, Walmart is now offering a low-cost checking account exclusively through its stores beginning in late October. The checking account product – GoBank – was launched in January 2013 (and was discussed in a September 2013 Corporate Insight slidedeck); however, it is now only accessible through Walmart stores.
GoBank does not charge fees for overdrafts or low balances, and waives the $8.95 monthly maintenance fee if account holders have $500 or more in monthly direct deposits. The account serves as an alternative to deposit products at established banks, as those checking accounts have been subject to fee hikes over the years, most notably overdraft fees, which have reached a national average of $30 per transaction in 2014. In partnering with GoBank, it appears that Walmart is attempting to attract customers who are being slammed with significant fees at large banks to conduct banking exclusively through the Walmart stores.
To appeal to an under-banked audience, Walmart sets easy parameters for its account opening process. To initiate the account, users must visit a Walmart store and present a valid ID proving they are at least 18 years of age. Once approved, customers must purchase a starter kit at a Walmart store for $2.95, which includes a temporary debit card that can be used for purchases until their official MasterCard debit card arrives in the mail. The starter kit debit card number and CVV serve as a code to begin using the GoBank account online.
In 2007, the retail giant lobbied for a federal bank charter in an attempt to open an official suite of banking products; however, this effort was denied after it was met with a wave of opposition from banks. Partnering with Green Dot allows Walmart to sell banking-related products without officially operating a bank, thereby circumventing this issue.
Although the GoBank account may appeal to a wider base of economically-marginalized customers, the porous application process and minimal account opening requirements could create concerns that Walmart is helping Green Dot lure in customers who are unqualified to hold checking accounts or who will not meet the direct deposit requirement. On the flip side, the checking account (if properly managed) does provide a cheaper alternative for customers who otherwise would not be able to afford the seemingly endless fees charged by traditional banks.