WALMART TO ENTER CASH WIRING BUSINESS
The category killer is at it again! This time taking aim at the lucrative cash wiring business that is heavily utilized by low income immigrants to wiring money back to their home countries at extremely high rates of interest. For now the international trade is safe since Walmart is only going to allow customers to do store to store money transfers in the U.S. But do you really think they won’t go international once the program is established? You bet they will especially since they have stores all over the world. Walmart is partnering with a company called Ria Money Transfer, who is a subsidiary of the payment company Euronet Worldwide, on this new venture. Walmart is going to provide money transfers at lower rates than what banks are offering to do this, and also check cashing stores. Banks have got to be quaking in their boots right now as Walmart gets increasingly more involved in financial services. The main competitors of Walmart in the cash transfer business, MoneyGram and Western Union, saw their stock fall 17% and 5% respectively following the announcement. Walmart had already entered this industry with pre-paid debit cards and check cashing so this is not that huge of a leap when you look at that. It is really brilliant because it offers their customers many options that will save them time and money all while keeping them away from competitors. How big is this industry? No figures are given but here are some shocking numbers: 29% of Americans didn’t have a savings account at a bank and 10% didn’t have a checking account in 2011. More stunning numbers on just how Walmart will undercut its rivals: for a $900 transfer at Walmart a customer would be charged $9.50, Western Union $76 and MoneyGram $73. This is going to completely change this industry and customers will benefit. But I am getting increasing uncomfortable with Walmart trying to provide every service under the sun in their stores and destroying all of the other businesses in those industries in the process. While it is capitalism and they are not doing anything wrong per se, I think that communities are much better off without a Walmart in them. What do you think? As always thanks for reading and have a great day.