Wal-Mart Stores Inc. (WMT) has decided to launch a new, lower-priced money transfer service in partnership with Ria Money Transfer, a subsidiary of electronic payments provider Euronet Worldwide Inc. (EEFT) with an aim to expand its financial services business.
The new Walmart-2-Walmart Money Transfer Service will start from Apr 24 and, as the name says, will let customers send and receive cash from family members and friends from one Walmart store in the U.S. to another. The fee is $4.50 for a transfer of up to $50 and $9.50 to send an amount of $800-$900. However, its competitors, in comparison, charge in the range of $4.75-$5.00 for a money transfer of up to $50 and around $57-$76 for transferring an amount of $800-$900.
Amid the dominance of traditional players in the industry, Walmart’s new lower priced money transfer service is expected to create a stir in the financial service market. The new service will generate incremental savings for all those millions of customers who do not have bank accounts. As far as Walmart is concerned, it is yet another initiative by the company to boost its finance revenues and revive its store traffic, which grappled with declining same-store sales for four straight quarters in fiscal 2014.
Walmart already offers other money services such as check cashing, bill pay, money orders and tax preparation services, as well as industry-leading pre-paid card programs though Walmart MoneyCard and Bluebird. Last year, Walmart U.S. generated about 1% of annual sales from financial services.
Walmart’s shares went up 0.6%, while Euronet shares jumped 4.05% after the announcement. However, the news to launch the new money transfer service pushed shares of other money transfer companies. Shares of The Western Union Co. (WU) declined by 4.9%, while those of MoneyGram International Inc. (MGI) plummeted 17.7%.
Walmart carries a Zacks Rank #4 (Sell).