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