The Wal-Mart MoneyCard: A Rip-Off

Ron Galloway reckons that Wal-Mart's new debit card "is simply a deposit account by another name" and that Wal-Mart has thereby managed to become a bank via the back door, as it were.

This is ridiculous. There's a world of difference between Wal-Mart selling prepaid Visa cards and Wal-Mart becoming a financial institution. For one thing, Wal-Mart isn't actually issuing the cards: instead, it's gone into partnership with GE Money and Green Dot. And in any case it's not deposits where banks make their money – it's fees and interest charges. And the Wal-Mart MoneyCard has neither of those.

As for the MoneyCard being a deposit account, that's just silly. You can't write a check on a MoneyCard. You can't wire money to it; you can't wire money from it. You don't get free statements. There aren't any free ATMs you can use, and each ATM withdrawal will cost you $1.95 minimum. You can't deposit money into it without paying a "reload fee", and you certainly can't deposit a personal check into it, even if you are willing to pay the fee. If you decide you'd be better off with a real deposit account, you can't take your money out without paying an unspecified "liquidation fee". The card has an expiry date, after which it can't be used. You can set up regular payments from the card, but once you've done so, it's really hard to stop them:

If you have told us in advance to make regular payments using your Wal-Mart MoneyCard, you can stop any of these payments. Here’s how: Call us at (877) 937-4098, or write us at Our Mail Address, in time for us to receive your request 3 business days or more before the payment is scheduled to be made. If you call, we may also require you to put your request in writing, to provide us with a copy of your notice to the payee revoking the payee’s authority to originate debits to your card, and get it to us within 14 days after you call. If we do not receive the written confirmation within 14 days, we may honor subsequent debits to your Wal-Mart MoneyCard. We will charge you $5 for each stop-payment order you give.

And how much does all of htis cost? $8.94 up front, plus $4.94 per month.

Frankly, this is a rip-off on multiple levels. And part of the reason is precisely that Wal-Mart can't make the kind of profits that normal banks can, from providing credit services. Wal-Mart's customers would be much better served by a Wal-Mart checking account, were such a thing allowed, than they are by this dreadful product.