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Walmart check-cashing serves the ‘underbanked’

David L Ryan/Globe Staff

When Walmart applied in 2006 for the authority to cash checks in its Massachusetts stores, bankers raised red flags. They warned that the nation’s largest retailer was trying to enter the banking business through the back door, evading regulations. “Walmart wants people to cash their checks in their stores so they can then make impulse purchases in the store,” a spokesman for the Massachusetts Bankers Association declared. “We don’t think this is a good service for consumers.”

At the time, Walmart was already cashing checks in most other states, as well as selling other financial services, such as bill-paying and money orders. There was little reason to doubt that what worked for consumers elsewhere would work in Massachusetts, and regulators gave Walmart a green light to open “money centers” at its 40-plus stores statewide.

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Eight years later, it’s clear they made the right decision.

As the Globe’s Deirdre Fernandes recently reported, Walmart today is the dominant check-cashing operation in Massachusetts, with about 30 percent of the state’s check-cashing facilities. Some companies charge as much as $25 to cash a check; Walmart charges $3.

That’s not a replacement for banking services for unemployed and low-income people, but it’s a vast improvement over many of the storefront check-cashing outfits that prey on desperate customers in poor neighborhoods. Walmart, which has taken some well-justified hits from local leaders on its employment practices, deserves credit for bringing needed competition to the check-cashing business.

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