By  on June 21, 2007

Undeterred by its failure to open a bank in the U.S., Wal-Mart Stores Inc. is expanding in-store financial service centers and launching prepaid debit cards to capitalize on growing demand from low-income Americans.

The world's largest retailer said Wednesday that by the end of 2008 it will boost the number of Wal-Mart MoneyCenters to 1,000 from 225, offering check-cashing, bill-paying and money-order services for cut-rate fees. The company also will start selling prepaid Visa debit cards, dubbed the Wal-Mart MoneyCard, in all its stores by yearend. The cards will allow customers without bank accounts or credit cards to make electronic payments.

Wal-Mart sees huge potential in providing financial services, and said other low-cost services would be announced later this year.

"Our financial services business is becoming very material" to the bottom line, Wal-Mart vice chairman John Menzer told financial analysts Tuesday. "It's growing at about a 30 percent clip. We're getting very good feedback from our customers. A lot of them are underserved in financial services."

The $345 billion retailer sells more than two million money service transactions each week. Wal-Mart has estimated that about 20 percent of its customers do not have bank accounts.

The announcements signal Wal-Mart's determination to get into financial services regardless of its inability to get a bank license. The retailer dropped a bid to be designated an industrial loan company this year after fierce opposition from unions, banks and some members of Congress. The proposal would have allowed Wal-Mart to process check and credit card transactions, as well as offer traditional banking services such as checking accounts and mortgages.

The Wal-Mart Visa MoneyCard is being issued by GE Money, a division of General Electric, and can be reloaded and used wherever Visa is accepted.

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