Walmart announced Wednesday that it will be launching a new checking account service called GoBank, in partnership with member FDIC Green Dot Corp. GoBank will be exclusive to Walmart and will join the growing list of financial services offered by the retailer, such as the Walmart MoneyCard and Walmart-2-Walmart wire transfers. The checking account will roll out nationwide by the end of October.
The checking account, however, marks a big move for Walmart; while many retailers offer financing, branded credit cards and money transfer services, checking accounts have remained a product of conventional banks. Walmart has partnered with Green Dot to offer credit and prepaid cards to customers for years, and Green Dot’s acquisition of a bank in 2011 seemed like it might be Walmart’s perfect entry to provide banking services.
Walmart’s GoBank Checking Account Touted for Low Fees
With GoBank, Walmart is seeking to bring a low-cost approach to checking accounts.
“Walmart customers want easier ways to manage their everyday finances and increasingly feel they just aren’t getting value from traditional banking because of high fees,” said Daniel Eckert, senior vice president of services for Walmart U.S., in a statement from Walmart.
Walmart’s checking account will charge no overdraft or bounced check fees, and require no minimum balance, according to the statement. The monthly maintenance fee is $8.95, but it’s waived if the account holder sets up qualifying monthly direct deposits of $500 or greater — a prerequisite that even those on pensions or social security would be likely to meet, reports the New York Times.
“Many so-called ‘free’ checking accounts aren’t really free because they have high overdraft fees,” said Steve Streit, CEO of Green Dot Corp., in Walmart’s statement. Streit cited a Bretton Woods study that reportedly found that bank customers typically pay $218 to $314 a year for a basic checking account.
Beyond the $8.95 monthly maintenance fee, the only other fees currently listed for the checking account on the GoBank site are a $2.95 opening fee (for the “starter kit”), a $20 minimum opening deposit, a $2.50 fee for out-of-network ATM use, and a 3% charge for foreign purchases or transfers.
GoBank Could Fill the Financial Service Gap for Low-Income Consumers
A GoBank checking account provides most of the same services as any basic checking account, such as mobile banking, peer-to-peer money transfers, balance notifications and more.
The GoBank service won’t be backed by the products and convenience of a conventional bank. GoBank customers won’t be able to visit a branch in person, earn interest on deposits, or go to Green Dot for other financing they might need, like auto loans or mortgages.
But for the segment of low-income consumers who are barely staying afloat, the tradeoff of limited services might be worth GoBank’s low fees. For unbanked or underbanked households, a basic checking account that can be counted on to not charge surprise fees would be a welcome alternative to spending an average of $2,400 a year for fees and interest on non-bank financial services.
In addition to low fees, the GoBank checking account offers other features that will make it more accessible. Walmart said that it will not use ChexSystems nor a credit score to screen customers.
“GoBank uses proprietary underwriting techniques to allow almost any consumer who passes ID verification to open an account,” according to the news release.
Another interesting feature is the Fortune Teller, a built-in budget management tool that gives account holders real-time advice on whether they can afford a purchase. The Fortune Teller’s sample response for a customer who is spending more than he has budgeted is, “Remember that time you won the lottery? I don’t either.”
Photo Credit: GoBank Facebook page