A new low cost money wiring service from Walmart saves customers money and showcases the thought process the company applies to disrupt high margin businesses and generate store traffic.
The new service is called Walmart-2-Walmart and when it launches on April 24 customers will be able to wire up to $900 for only $9.50. between Walmart’s 4,000 U.S. locations. The service is intended to complement Walmart’s existing relationship with MoneyGram which offers a broader range of financial services including international transfers.
“After listening to our customers complain about the high fees and confusion associated with transferring money, we knew there had to be a solution,” said Daniel Eckert, SVP of services for Walmart U.S.
The solution was to introduce a simpler, two-tiered pricing structure and limit the transfer amount to a daily total of $900. Why $900? According to Eckert, that is the magic number where government regulations and various reporting requirements kick in that add complexity and cost to offering wire transfer services. Staying below $900 meant Walmart and its partner in the undertaking, Ria Money Transfer, a subsidiary of Euronet, could minimize complexity and cost to create a different margin structure that would enable the introduction product that could be priced substantially below other offers in the market.
“Walmart-2-Walmart brings new competition and transparent, everyday low prices to a market that has become complicated and costly for our customers. We’re doing what we do best - launching a new service that challenges the status quo and drives down prices for our customers,” Eckert said.
The latter comment is reminiscent of what Walmart U.S. president and CEO Bill Simon said back in 2006 shortly he after he joined the company to oversee the pharmacy business and Walmart introduced a $4 flat rate generic drug pricing program. Similar thinking was applied more recently when Walmart launch a used game trade in program and tapped into customers’ frustrations around the value they were receiving from other trade in programs. And most recently, Walmart team up with the Wild Oats brand to launch a new line of lower cost organic dry grocery products.
While the dynamics of each program are different, the commonality is that they all reinforce Walmart’s central value proposition of saving customers money so they can live better. That message is sure to resonate strongly in the financial services area where major institutions and payday lenders are routinely criticized for high fees. According to Walmart, competitive offerings in the wire transfer world can often include 10 or more fee tiers and charges of up to $70 for transferring less than $1,000.
The added benefit of the program from Walmart’s standpoint is that every time a customer uses the Walmart-2-Walmart service to wire money, the recipient at the other end will be receiving a handful of cash inside a Walmart store.
The new service is a complement to other program Walmart offers such as check cashing, bill pay, money orders and tax preparation services, as well as pre-paid card programs though the Walmart MoneyCard, and Bluebird, a checking and debit alternative.