Walmart Enters P2P Space

walmart_interiorAmerican consumers may not go to bank branches all that often, but they sure go to Walmart. 80% of Americans are said to shop at Walmart at least once a year.

America’s largest retailer debuted a service called Walmart-2-Walmart last week that allows customers to send money to other customers using the store’s network of more than 4,0o0 retail locations.

These person-to-person payments are ordinarily a feature of digital banking services, and see their fullest use case in Africa, where M-Pesa and similar services allow for near-frictionless movement of money through mobile phone carriers. M-Pesa users can use the cash digitally fro their phones or pick up cash at agencies that partner with the service.

After the announcement, some observers wondered if the US-only aspect of the service would limit its utility, but Walmart seems to be looking to the large population of customers with limited bank relationships to drive usage rather than to the international remittances market. (Walmart does have a large non-US footprint that it could potentially extend the service to later.) Transfers up to $50 cost $4.50, and transfers up the limit, $900, cost $9.50.

Transfers can be funded by debit cards or cash. While talk of money transfers brings Western Union to mind, cash use brings up other potential competitors, such as PayNearMe. This service allows cash-dependent customers to pay bills at retail locations such as 7-Eleven and Family Dollar. Walmart’s service may pose a threat to PayNearMe, given the store’s enormous customer base.

Walmart already offers extensive financial services to its customers, including check cashing and bill payment, and a host of banklike services including a mobile app and check writing through its Bluebird prepaid card, issued in partnership with American Express. Walmart also offers the Walmart Money card, a prepaid card that also has a mobile app attached. Walmart also offered a special cash payment service that allows purchases on its website to be funded later in cash at Walmart stores.