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World’s largest retailer to offer money transfers

Walmart’s lower-cost service will be available starting April 24.

Reuters/File 2012

Walmart’s lower-cost service will be available starting April 24.

NEW YORK — Walmart Stores Inc. is delving deeper into financial services at its stores and shaking up the money transfer business.

The world’s largest retailer introduced a money transfer service Thursday that it says will cut fees for its low-income customers by up to 50 percent, compared with similar services elsewhere.

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Called Walmart-2-Walmart, it’s being rolled out in partnership with Ria Money Transfer, a subsidiary of Euronet Worldwide Inc.

Shares of MoneyGram International Inc. and Western Union Co. sank almost immediately after Thursday’s announcement. MoneyGram closed the day down 17.7 percent, while Western Union lost nearly 5 percent.

Walmart’s service, available starting April 24, allows its customers to transfer up to $900 to and from more than 4,000 Walmart stores in the United States. It’s a huge footprint that could reshape that industry and is likely to set off a pricing battle.

Customers can transfer up to $50 for a $4.50 fee and up to $900 for $9.50. Comparable services elsewhere cost up to $70 when transferring less than $1,000, according to Walmart.

Western Union on its website puts the price of transferring $900 in New York between $20, if using a bank account, and $85, if using a credit or debit card.

Wal-Mart Stores Inc.’s announcement is the latest way it’s acting more like a bank. About a decade ago, Walmart applied unsuccessfully for an industrial bank charter. Those efforts were blocked even though the retailer vowed it would not open retail branches but wanted to use its bank to process card transactions.

In 2007, it abandoned the plans, but it has been creating an expanding menu of financial offerings, aimed particularly at customers with limited access to banks.

Walmart already offers prepaid cards and check-cashing and tax- preparation services.

MoneyGram is the rival that could get hit the hardest. It’s the company that currently provides money transfers to Walmart.

MoneyGram could not be reached immediately for comment. But in a statement e-mailed to the Associated Press, Western Union said, ‘‘Our retail product and service offerings today are already quite diverse. ‘‘

Western Union noted that people have the flexibility to send money in minutes or the next day from a retail agent’s location or online, and they can send money directly into a bank account.

‘‘The company is well positioned in the US domestic money transfer space, having offered a fee of $5 for $50 since 2009,’’ Western Union added.

Walmart is aggressively trying to increase foot traffic in its stores since seeing comparable-store sales decline for four consecutive quarters.

The Walmart-2-Walmart service may help stem that trend, giving customers one more reason to spend additional time inside Walmart.

Daniel Eckert, the company’s senior vice president of services, said that the move into the money transfer business gained momentum after company officials heard complaints from customers about high fees elsewhere. He acknowledged in a conference call Thursday that the program could bring more customers into stores, but he insisted the goal is to offer shoppers more financial choices.

Eckert told reporters the company did not alert MoneyGram that it was teaming up with Ria, but said that for more than a decade Walmart has had a strong partnership with MoneyGram and that it renewed its contract in 2012.

He pointed out that MoneyGram has no money transfer limits and customers can transfer funds outside of the United States using its services.

‘‘Walmart-2-Walmart brings new competition and transparent, everyday low prices to a market that has become complicated and costly for our customers,’’ Eckert said.

According to a 2011 study conducted by the Federal Deposit Insurance Corp., 29 percent of American households do not have a savings account, while about 10 percent do not have a checking account.

Shares of Wal-Mart Stores Inc., based in Bentonville, Ark., rose 44 cents, or 0.6 percent, to $77.66 in trading Thursday.

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