Thu April 24, 2014
Competition Watches As Wal-Mart Debuts Money Transfer Service
Originally published on Wed April 30, 2014 11:06 am
DAVID GREENE, HOST:
Wal-Mart is rolling out a new money transfer service today. The company says this will make things much simpler for people seeking to send and receive cash. For years, consumers might otherwise have looked to services like Western Union or Money Gram, and some wonder whether those companies can survive this new competition.
Here's NPR's Allison Keyes.
ALLISON KEYES, BYLINE: Tunoa Hampton was standing in line at a Wal-Mart Money Center in Washington, D.C., but she wasn't waiting to transfer funds.
TUNOA HAMPTON: I don't typically use wire transfers. I'm an electronic kind of person through my bank.
KEYES: But she says she could see why some customers might be willing to use Wal-Mart's new store-to-store money transfer system.
HAMPTON: It might be useful for those though, that don't have banking services other places.
DANIEL ECKERT: We think that it actually does serve a valuable need in the marketplace.
KEYES: Daniel Eckert is senior vice president Wal-Mart Services. The new service allows customers to send and receive up to $900 at a time - to and from its more than 4,000 U.S. stores. Transactions up to $50 costs $4.50 and anything over that up to $900 cost $9.50. Eckert says Wal-Mart is simply trying to bring choice to a market customers complained was confusing and costly.
ECKERT: Competition that's out there today would have between 10 and 14 different pricing tiers depending on the amount of money that you would send.
KEYES: MoneyGram charges 25 cents more for transfers up to $50 bucks, $2 more for transfers up to $200 and an average of $44 more for transfers up to $900. But Chairman and CEO Pamela Patsley says she thinks MoneyGram will retain a lot of its customers. It offers international transfers, works with other large retailers and also many smaller businesses.
PAMELA PATSLEY: We have over 35,000 agent locations in the United States, only 4,000 of those thereabouts are Wal-Mart locations.
KEYES: Patsley also says MoneyGram isn't planning on cutting its prices yet, but it will be measured and targeted in its response to the competition.
Though shares for both MoneyGram and Western Union dropped when Wal-Mart announced its new service, analysts such as Ben Jackson think it won't be the end of the other businesses.
BEN JACKSON: Reports of their demise are greatly exaggerated. Let's say it that way.
KEYES: Jackson is a senior analyst with Mercator Advisory Group, a payments and banking consulting firm. He notes that while Wal-Mart is building more stores in cities like Washington, D.C., there are lots of MoneyGram and Western Union locations in urban centers where Wal-Mart doesn't have as strong a presence.
JACKSON: Somebody who is living in a city, working in a city, taking their pay and transmitting it, they're going to go to places that are close and convenient and also places that they trust.
KEYES: Jackson says Wal-Mart has been fairly successful in offering financial services including check cashing to customers who aren't part of the traditional banking system.
JACKSON: It's a chance to start a extend its strategy of being a one stop shop for all of the needs that a person might have.
KEYES: Jackson thinks there will be strong competition between the Wal-Mart to Wal-Mart money transfer service and its competitors.
Allison Keyes, NPR News, Washington. Transcript provided by NPR, Copyright NPR.