Walmart has finally made it official: As of October, it will directly offer federally-insured checking accounts, albeit through an arrangement with longtime partner Green Dot. The service will be called Go Bank and its raison d’etre is to waive fees for bounced checks, overdrafts and not having a minimum account balance—although it insists on direct deposits of at least $500/month or it will charge $8.95/month—to lure in lower-income shoppers who are hit hard by such fees. The service does have a one-time fee of $2.95 and is designed to interact with mobile devices as well as directly at Walmart stores.
Daniel Eckert, a Senior VP/sales at Walmart, said such fees can cost bank customers $200-$300/year. Eckert then translated that—in a comment made to the Los Angeles Times—in Walmart terms: “That is typically what our customers spend for fresh fruit and vegetables a year,” Eckert said.
But how can any financial institution handle the risks and costs associated with not charging for bounced checks and overdrafts? Green Dot spokesperson Sharon Pope told the LA Times that although they intend to decline such transactions, “sometimes larger purchases slip through.” The account is then frozen until the dollars are recovered.
Walmart will also forego the typical in-depth customer paperwork interrogations that often accompany a checking account application and will instead simply verify identity and then use its own credit checking system. Green Dot CEO Steve Streit told the LA Times that this proprietary credit checking system “is less likely than traditional bank systems to reject lower-income applicants and people who have damaged their credit by running into trouble with unrepaid overdrafts in the past.”