US retail giant Walmart has announced this week that it is to launch low-cost banking services in partnership with Green Dot Bank.
Branded GOBank, the digital only, non-branch checking account is set to launch in October with an enrolment fee of $2.95. It will offer customers a Mastercard debit card, paper checking and an easy-to-use mobile banking app.
The account comes with no minimum balance fees, overdraft charges or monthly fees, provided that users deposit at least $500 a month. Otherwise there is an $8.95 monthly fee.
Walmart says that GOBank is aimed at an unbanked population who have lower incomes and credit scores, and who struggle to cope with ‘excessive’ banking fees.
Alok Deshpande, chief product officer of Green Dot commented: “The average American is paying $214 to $315 a year when you add it up. The majority of that is coming from overdraft and penalty fees, and with GoBank we don’t charge any of those fees.”
Walmart already offers financial services including money transfers and prepaid cards, and has previously demonstrated interest in entering the banking market. In 2005 it applied for a banking licence, which it later withdrew after facing strong opposition from established banks, who have continued to be wary of the company ever since.
This latest move by Walmart is once again likely to draw consternation from such banks, says Brian Sozzi, CEO and chief equities strategist of Belus Capital Advisors:
“In terms of why traditional banks hate Walmart’s advances onto their turf: any account opened with the world’s largest retailer is an account that may be closed with them, or not opened at all. Bye-bye overdraft fees, among many others.”
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