The state’s dominant check-cashing operation isn’t an inner city storefront or a financial company with a brick facade. It’s your neighborhood Walmart.
The world’s largest retailer, best known for low prices on everything from detergent to dining room sets, has become a significant player in the financial services market by doing what it does best: cut costs and appeal to budget-conscious shoppers.
Walmart holds 30 percent of the approximately 150 check-cashing licenses in Massachusetts, easily eclipsing long-established franchises such as Boston Check Cashiers Inc. and All Checks Cashed Inc.
The Arkansas-based retailer also has expanded into prepaid cards, bill- paying services, and most recently its own money-transfer business.
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“Walmart is a shadow bank,” said Mike Moebs, an economist and founder of an Illinois economic research firm, Moebs Services Inc. “They are moving daily to dominate the small cash market, taking a niche that is low-cost for consumers and profitable for Walmart.”
Walmart charges $3 to cash a check of up to $1,000, compared with as much as $25 at other check-cashing services and the $7 that many banks charge people who don’t have accounts with them.
In the chain’s smaller stores, customer service counters double as financial hubs; in the cavernous “superstores,” Walmart Money Centers are wedged between optometrists and Subway sandwich outposts.
Eugene Campbell, 36, a freight worker from East Providence, recently stopped by customer services in the Walmart in Walpole to cash a paycheck from one of his two jobs. Campbell, the father of four, said that after being hit by a series of fees that snowballed into $700 during one month, he decided to leave his bank and get rid of most of his bank accounts.
“It’s cheaper than anything out there and there are no overdraft fees,” he said of Walmart. “I’ve never had a problem.”
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But bank executives do. They say that Walmart can offer low prices on financial services because the chain has cherry-picked services not subject to the layers of regulation that banks face.
Unlike check-cashing services, banks are required to lend in urban and suburban communities, provide direct insurance on deposits, and make detailed reports to several federal and state agencies, said Richard Holbrook, chairman of the Massachusetts Bankers Association and chief executive at Eastern Bank.
“We’re not afraid of competition,” Holbrook said. “We just want to make sure the rules are the same.”
Wal-Mart Stores Inc. several years ago sought to obtain a license to operate a bank, but abandoned the effort in 2007 in the face of widespread opposition. Walmart officials said they have no intention of trying again to become a bank; the check-cashing and ancillary services are aimed only at meeting the needs of customers.
“We are absolutely a retailer that has financial services offering,” said Molly Blakeman, a spokeswoman. “We are looking to give our customers options. When customers have options they win.”
Financial services, including check-cashing and prepaid cards, accounted for less than 1 percent, or about $280 million, of Walmart’s $279.4 billion in US sales last year, according to financial filings. The company also gets the benefit of financial services customers spending at least part of their paychecks in the stores, analysts said.
At the Walmart store in Walpole, customer service clerks process returns of shirts and batteries, help consumers who want to exchange recently purchased appliances, and walk people through job applications. But starting at about lunchtime on Thursday — payday for many people — customers line up at the counter.
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Julie Smith, 43, a nurse who lives in Milton, keeps a small savings account at a credit union. But she uses Walmart’s financial services for her daily money needs, drawn to the lower costs and the ability to get cash fast.
“I don’t need the regular banks,” Smith said.
Walmart has taken aim at consumers who don’t have deposit accounts or rely on alternative financial services, such as check-cashing firms, payday loans, and money orders.
The Federal Deposit Insurance Corporation estimates that one in four American households fits into these categories.
Many are lower-income families, and Walmart’s fees and convenience, especially for suburbanites, make it an appealing alternative, consumer advocates say. Walmart has 48 stores in Massachusetts, but none in Boston.
“People who are forced to live on low incomes are very aware of how much things cost,” said Michael Goodman, associate professor of public policy at the University of Massachusetts Dartmouth. “It seems in the short run a rational choice for folks in that position.”
He oversaw a 2011 study that found many low-income residents in New Bedford avoided traditional banking services because they did not trust banks, felt they did not need an account, and feared they could not afford the fees.
But Goodman said building a relationship with a bank can provide long-term advantages, leading to better access and rates on loans and products that can help secure assets, whether a home or a college degree.
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A study released last year by the state Division of Banks found that consumers can spend from about $200 to more than $1,300 a year on fees by using check-cashing services, as opposed to using a basic banking program with a $36 annual fee that the state established more than two decades ago. The program is offered primarily by smaller banks.
Walmart’s upfront fees and low-cost products can help consumers save money and graduate to traditional accounts and bank products, said Tom Feltner, director of financial services at the nonprofit Consumer Federation of America.
“The opportunity to start building savings is a step in the right direction,” he said.
Deirdre Fernandes can be reached at deirdre.fernandes@globe.com. Follow her on Twitter @fernandesglobe.