Wal-Mart is one of the few retailers who have catered to the needs of the unbanked. A huge number of US households have opted to not have a savings or checking account at a financial institution. It may be their distaste for the bank fees or the dislike of banks altogether. Wal-Mart has always ensured that borrowers of payday loans always have a place to go.

Unbanked customers are able to meet their banking needs through Wal-Mart’s twelve thousand money centers at a significantly reduced cost. Wal-Mart has made it easy, cheap and convenient to carry out all banking functions, such as wiring money here or abroad and paying bills without a bank. Recently, it is going to get a sizeable competition from Amazon.com as it launched Amazon Cash, which precisely focuses this same portion of the population.

Banking without banks

As per FDIC, approximately nine million or 7% of all US households do not have an account at any insured institution. Furthermore, 20% or 24.5 million households are underbanked meaning that they do have a savings or checking account, but make use on non-bank services for all their banking needs.

Even though traditional thinking has made everybody believe that banks are the ultimate of finance, it shows that a sizeable portion of the population thinks otherwise. They have a very high level of dissatisfaction or distrust with the conventional financial institutions.

A better option was offered by Wal-Mart. It attempted to enter the banking industry by applying for an ILC or industrial loan corporation charter and wanted to establish something similar to what GE and Target operates. However, banks raised an objection and the retailer had to withdraw its application.

At present, Wal-Mart offers a full selection of financial services to unbanked people. It enables customers to cash government checks and payrolls, print business and personal checks, and get prepaid debit cards. Its Bluebird financial accounts are arranged, via American Express.

These financial services total to less than one per cent of Wal-Mart’s yearly net revenues. This is still over fourteen billion worth of financial business that is being conducted and recently it noted that the volume of money services transaction that Wal-Mart is making can be measured “with a B”. It is no wonder that Amazon.com is eagerly looking forward to being a part of the action.

Taking advantage of the opportunity

Amazon Cash is not yet as elaborate as a Wal-Mart Money Center, but it targets the unbanked customers. It may even offer a platform for expansion in the future. Customers of Amazon will not be requiring a checking amount to deposit $15 to $500 in cash into an Amazon account. Amazon customers can even go to retail stores, such as Speedway, CVS, Sheetz and others and just show them the barcode from Amazon that they have. They can download it to their smartphone or print it out. To use the service, there are no feed required.

Consumer keeps becoming valuable as Amazon and Wal-Mart clash with each other for retail dominance. Amazon can win more customers by developing a platform that is easily accessible. Amazon Cash is going to be available on smartphones, as well as, by means of printing out a barcode.

Small start, but great opportunities for growing big

Initially, Wal-Mart may not be losing a lot of customers to Amazon since the money deposited at the e-commerce leaders cannot be spent anywhere else, but Amazon. PayPal has its own online cash service is accessible for use at so many retailers while customers of Wal-Mart have a wide range of financial services available at its physical stores and mobile phone. It is easy to see why those dependent on payday loans are also increasingly warming up to the idea of such financial services.

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