An Aug. 5 editorial praised Walmart for providing nontraditional banking options for the “underbanked” in select stores. While offering simple financial services such as low-cost check cashing sounds like a good idea, we are left to wonder what is motivating the largest retailer in the world to enter into this business.
On the surface this looks like Walmart is providing a needed service to the community, but we don’t need to dig deep to see that this is another strategy to increase profits.
Ben Jackson, a financial analyst for Mercator Advisory Group, recently told Forbes, “The big strategy is capturing people’s wallets as soon as they are filled. If a customer’s wallet is filled at a Walmart store, then it’s likely the customer will do some incremental shopping there too.” While this motivation may seem different from that of payday lenders that charge outlandish fees, in both cases they are driven by profiting off of low-income consumers.
While we believe that there is a great need for affordable and accessible banking options, we support offering these services through an established public institution: the US Post Office. This option would address the needs of the financially excluded, provide banking options to working-class communities and communities of color, ease the financial burden of being poor, and ensure that wage earners can provide for their family without being preyed upon by businesses.