New Product: Wal-Mart Offering Low Cost Mobile Checking Account

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Sep 24, 2014

Might be fun to have students evaluate this new checking product from Wal-Mart.  Here are the details from a variety of media sources:

  • Partnering with Green Dot (NY Times):  “Walmart, the nation’s largest retailer, is teaming up with Green Dot, known for its prepaid payment cards, to supply checking accounts to almost anyone over 18 who passes an ID check.”
  • Alternative to traditional checking accounts (NY Times):  “The accounts are intended to be low-cost alternatives to traditional bank checking accounts, with no fees for overdrafts or bounced checks and no minimum account balance.”
  • They do have monthly fees IF you don’t have $500 direct deposit monthly (NY Times):  “The new accounts from Green Dot, called GoBank, will cost $8.95 a month if they have direct deposits totaling less than $500 a month.”
  • Simplifying new account set-up (NY Times):  “The model is expected to allow almost any consumer who passes an identification check to open an account in minutes, according to Green Dot.”
  • Hoping to attract unbanked (from Fortune):  “Since the recession, many banks have tightened standards for banking services, thus limiting access for those with weak credit. Nearly 10 million U.S. households to not use a bank, according to the Federal Deposit Insurance Corporation.”
  • Features of account (from WSJ):  “The accounts will include mobile features such as the ability to instantly send money via email or texting and come with a linked Mastercard Inc. debit card.”
  • Could threaten payday lenders with this feature (from Christian Science Monitor):  “Customers can receive payroll direct deposit earlier than their normal payday if their employer notifies GoBank of a deposit in advance.”  Will they charge interest?
  • Building nudges into the product (from CSM):  “GoBank checking accounts offer additional services to aid in budgeting. The account notifies customers in real time if a purchase they are about to make falls outside of their budget.  The “Fortune Teller” feature crosschecks the price of a particular item against a customer’s planned income and other expenses.  In addition, customers can send money instantly to each other at no charge through either email or a text message.”

Will it work?  Investors cheered the move with Green Dot’s stock price up 23% in midday trade and Wal-Mart up 2%.  Good question for students.  Why are the stock prices reacting differently?  Hint:  Wal-Mart has this other small business in retail:)

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

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