On the money at Wal-Mart

BENTONVILLE, Ark. Wal-Mart has accelerated growth of its highly profitable financial services businesses with an announcement earlier today that it has launched a reloadable prepaid Visa card and in-store money centers will open 1,000 in-store money centers by the end of 2008.

Wal-Mart began experimenting with money centers several years ago and quietly expanded the concept to stores even as its efforts to open a conventional bank were stymied by federal regulators and opposition group. There are currently 225 Wal-Mart MoneyCenters, but that figure is expected to double by the end of this year and double again by the end of 2008.

“I know right now we could use more than 1,000 (MoneyCenters),” said Jane Thompson, president of Wal-Mart Financial Services.

She added that the MoneyCenters offer one of the highest per square footage rates of profitability in the store and the selection of locations was based on historical transaction data as Wal-Mart currently offers a range of financial services such as wire transfers and check cashing at its customers service counters.

Wal-Mart last year conducted more than two million money services transaction each week and contends that customers who used its services save an average or $450 a year, or nearly $40 each month.

“The $40 our customers save each month can grow to become the down payment on a house or help pay for a child’s college education,” Thompson said. “That’s our goal – to help our customers prepare and save for the future by giving them access to greater financial opportunities.”

The MoneyCenters will be staffed by Wal-Mart’s own employees and hours of operation will be from 7 a.m. to 7 p.m., seven days a week.

With the rollout of MoneyCenters and the new reloadable, prepaid Visa, Wal-Mart is focused on a market of more than 70 million people who are, as Thompson said, “unbanked.” The prepaid Visa card in particular is expected to be a big hit, because it will allow people access to services most Americans take for granted such as paying at the pump when filling up their car or using an automatic teller machines.

“These type of prepaid debit cards are going to change the lives of more than 70 million people,” Thompson said.

They are also going to be good for Wal-Mart’s business overall. Earlier this month at Wal-Mart’s shareholders meeting, chief administrative officer John Menzer indicated financial services sales and profits were growing at more than 30% annually.

“The Money Centers are doing very, very well and we are going to continue to grow in that arena,” Menzer said in early June.