Wal-Mart will expand its check-cashing business

The L.A. Times reports:

Wal-Mart Stores Inc. said today that it would dramatically expand low-cost financial services offerings such as check cashing and money transfers for millions of low-income customers who don't have bank accounts.

The world's biggest retailer said it would open 1,000 Wal-Mart MoneyCenters by the end of next year, up from about 225 in stores now.

The company also said it would expand a pilot program that offered a Wal-Mart/Visa reloadable debit card, issued by GE Money Bank, to 1,300 stores in June and all of its more than 3,300 U.S. discount and Supercenter stores by the end of the year.

"Many of our customers are paying too much, traveling too far and not being well served," Jane Thompson, president of Wal-Mart financial services, said in a statement. "But they still need to pay their bills, cash their checks and transfer money. We're offering them a safe place and a card to help them manage their money."

Wal-Mart, which processes more than 2 million money services each week, has long eyed expansion in the financial services sector.

Transactions including money transfers, check cashing and bill payment offer a profitable new business for a company that in recent years has suffered from slumping sales and a bruised reputation. Just as important, the services give cash-strapped customers -- a big part of Wal-Mart's customer base -- new reasons to go to Wal-Mart stores.

"While we believe these initiatives, given their size, will not materially boost earnings in the near term, we do see them as a positive long-term driver of customer loyalty," Goldman Sachs analyst Adrianne Shapira wrote in a note to clients.

In the face of strong congressional and regulatory opposition, Wal-Mart this year withdrew its application for what's known as an industrial loan corporation, the company's fourth failed bid to open a bank since 1999.

Competition.We can't wait until Wal-Mart gets into the ATM business.