Wal-Mart takes on MoneyGram, PayPal, and Western Union

Wal-Mart is jumping into the money transfer business. Starting April 24, customers will be able to transfer up to $50 for a $4.50 service fee and up to $900 for $9.50.

Damian Dovarganes/AP
The world's largest retailer introduced a new money transfer service Thursday. The Walmart-2-Walmart service is being rolled out in partnership with Ria Money Transfer, a subsidiary of Euronet Worldwide Inc.

Wal-Mart is delving deeper into financial services at its stores and shaking up the money transfer business.

The world's largest retailer introduced a new money transfer service Thursday that it says will cut fees for its low-income customers by up to 50 percent compared with similar services elsewhere. The Walmart-2-Walmart service is being rolled out in partnership with Ria Money Transfer, a subsidiary of Euronet Worldwide Inc.

Shares of money-transfer companies MoneyGram and Western Union slid Thursday.

The service, which will be available starting April 24, allows its customers to transfer up to $900 to and from more than 4,000 Wal-Mart stores in the U.S.

It's a huge footprint that could reshape that industry and is likely to set off a pricing battle.

Customers can transfer up to $50 for a $4.50 service fee and up to $900 for $9.50.

Comparable services elsewhere cost up to $70 when transferring less than $1,000, according to Wal-Mart.

Western Union on its website puts the price of transferring $900 in New York between $20, if using a bank account, to $85 if using a credit or debit card.

Wal-Mart's announcement is the latest way it's acting more like a bank. About a decade ago, Wal-Mart applied unsuccessfully for an industrial bank charter. Those efforts were blocked even though the retailer vowed it would not open retail branches but wanted to use its bank to process card transactions. In 2007, it abandoned those plans, but it has been creating an expanding menu of financial offerings for customers, aimed particularly at those with limited access to banks. Wal-Mart already offers prepaid cards, check cashing services, and tax preparation services.

Shares of MoneyGram International Inc., which could get hit the hardest, fell 18 percent to close at $14.81. MoneyGram is the company that currently provides money transfers to Wal-Mart. The stock of Western Union Co., its rival, fell 5 percent to $15.25.

MoneyGram is not "taking any pricing actions" at Wal-Mart or at any other US location in response to Wal-Mart's actions, MoneyGram said in an emailed statement. It said that Wal-Mart is its single largest corporate customer, but has been decreasing as a percentage of its revenue for the past five years.

In a statement emailed to The Associated Press, Western Union said, "Our retail product and service offerings today are already quite diverse. "

Western Union noted that people have the flexibility to send money in minutes or next day from a retail agent location or online and they can also send money directly into a bank account.

"The company is well positioned in the US domestic money transfer space, having offered a fee of $5 for $50 since 2009," Western Union added.

Wal-Mart is aggressively trying to increase foot traffic in its stores after seeing comparable-store sales decline for four consecutive quarters.

The Walmart-2-Walmart service may help stem that trend, giving customers just one more reason to spend more time inside Wal-Mart.

Daniel Eckert, Wal-Mart's senior vice president of services, said that the move into the money transfer business gained momentum after company officials heard complaints from customers about high fees elsewhere. He acknowledged in a conference call Thursday that the program could bring more customers into stores, but he insisted that the goal is to offer shoppers more financial choices.

Eckert told reporters that it didn't alert MoneyGram that it was teaming up with Ria, but said that for more than a decade Wal-Mart has had a strong partnership with MoneyGram and that it renewed its contract in 2012. He pointed out that MoneyGram has no money transfer limits and customers can transfer funds outside the US using its services.

"Walmart-2-Walmart brings new competition and transparent, everyday low prices to a market that has become complicated and costly for our customers," Eckert said.

According to a 2011 study conducted by the Federal Deposit Insurance Corp., 29 percent of American households do not have a savings account, while about 10 percent do not have a checking account.

Shares of Wal-Mart Stores Inc., based in Bentonville, Ark., rose 44 cents to $77.66 Thursday.

You've read  of  free articles. Subscribe to continue.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.