By Greg Morcroft - Just days after news that retail giant Wal-Mart-Stores Inc. NYSE:WMT unveiled plans to expand into the organinc food business the company late Thursday said it's also adding a new financial service, launching what it calls Walmart-2-Walmart, a new service that will allow US customers to transfer money to each other and will directly compete with industry leaders, including a current partner.
The new service, available starting April 24 in the firm's 4,000 U.S. stores, will directly compete with firms like Western Union Inc. and MoneyGram and Money. MoneyGram, which already provides money transfers inside Wal-Marts, told listeners on a conference call Thursday that the company just learned of their partner’s plans on Wednesday.
Meanwhile Ron Shevlin, a senior analyst at financial consulting firm Aite Group, told the Wall Street Journal that, “this is a relatively easy service for Wal-Mart to develop, because it fits with the customer base that they already have, and they don't have to spend a lot of money to create, implement or market the service."
Wal-Mart's already in the financial services business to a degree, cashing checks and offering customers’ money orders and tax preparation services.
The firm's2007 attempt to create a bank to handle its massive volume of credit card transactions failed after the banking industry lobbied hard to prevent the retail powerhouse from encroaching on its traditional roles.
Not surprisingly, Wal-Mart's new offering will offer customers services at a lower price than current partner MoneyGram, prompting that firm's CEO Pamela Patsley to tell conference call listeners Thursday that, "we will remain very measured, disciplined and targeted in our response to competition," but she added the company has no plans to cut prices.
According to the Wall Street Journal, MoneyGram received 27% of its total fee and investment revenue last year from Wal-Mart.