In a world obsessed with the digital future of money, cash can be a pretty easy thing to overlook. That’s of course, unless one is talking about fighting and winning the war on it.
But for nearly 10 percent of American consumers who use cash as their primary method of payment,cash isn’t irrelevant so much as it is their once and future payments king. And while cash represents only about 14 percent of the transaction value in the U.S., it drives 40 percent of all payments transactions — since cash tends to dominate low-dollar transactions.
That can make cash-related innovation sometimes easy to overlook in a country that is moving forward digitally with great alacrity. Which also makes cash innovation disruptive, when targeted at a pain point that cash-centric consumers have
Something Walmart discovered three years ago when they first launched its money transfer service,Walmart2Walmart. Walmart2Walmart used its network of over 4,000 stores in the U.S. as agent locations for people to send and receive cash, inexpensively and quickly.
“We added up how much we’ve saved customers over that time,” Kirsty Ward, vice president, Walmart Services, told Karen Webster in a recent conversation. “And we’re at the half- billion-dollar mark — as in we have saved our customers roughly $500 million in fees they would have had to spend at other outlets to send money.”
And that, Ward noted, is just the savings within Walmart itself that it can count directly. The reality is that given Walmart’s size, scope and influence on the market, Ward thinks that the broader savings are likely larger. She said that when Walmart lowered its prices, so did many others.
“It is interesting actually, looking over the last three years, we did disrupt the market and in a very good way for the consumer. We encouraged our competitors to drastically lower their pricing as well, so who knows what the real fee saving number is — it could easily be in the billions.”
And Walmart, Ward said, is very happy with those results. But it now wants to up the money transfer game by lowering prices further. So today, they’re making Walmart2Walmart even cheaper and easier to use.
Going forward a money transfer of under $50 will cost $4, a transfer between $50 and $1,000 will cost $8, and transfers between $1,000 and $2,500 will cost $16.
Those savings, noted Ward, will add up to between 50 to 90 percent savings for some consumers as well as offer uniformity and transparency in pricing. Ward cited the example of someone in New York sending $1,000 with their key competitor — they would have to spend $86 to do that. With today’s Walmart2Walmart fee structure, it will cost that sender $8.”
All Walmart transfers are priced the same — which is just not true everywhere.
Ward said that customers may not be aware when they are sending in a region that assesses high fees for the same services. Even though dollars sent may be identical, someone in New York may be charged a whole lot more than someone in Peoria.
“We don’t see why it should be different whether you are sending money from San Francisco or New York or Northwest Arkansas. Location doesn’t change the process, so customers shouldn’t be charged differently.”
Ward also said that customers need the services to be easier to access — since knowing what one is going to pay is little comfort while waiting in a long line to do it.
Which is why the other news being made today with the Walmart2Walmart program upgrades is about helping customers skip the wait — with a little help from American Express.
Bringing In Bluebird And Digitization
Customers using the American Express’ Bluebird prepaid checking alternative starting next month (May) will also be able to access the Walmart2Wamart system more directly. They will be able to use their app to send money digitally for a cash pickup at Walmart store locations — under the same free structure. The receiver picking the funds, on the other hand, doesn’t need to have a Bluebird account
“This is about trying to eliminate those paper forms and 20-foot-long paper receipts,” Ward noted. “That’s why we have partnered with Amex and we’ve incorporated money transfers into the Bluebird account.”
Ward explained that since time is an important currency for everyone, by eliminating paper forms and store waits, Walmart is putting currency in people’s pockets in more ways than one.
And Making More Sales, Too
The user groups for the Walmart2Walmart service vary, Ward noted. Military members and oil field workers tend to be regular users who send money home regularly along with their paycheck. Parents use the service to send money to college students whose Ramen funds may have run dry. And then, of course, there are the emergencies for which money transfers are incredibly useful.
“This is a way of getting emergency cash instantaneously to someone because the transaction is released within minutes, so it is a very quick and easy way for people to get help when they need it,” Ward said.
And while those emergency funds are often spoken for, the military or oil field wives at home and hungry college students find themselves in a Walmart with cash in their pockets, which is not a bad place for a retailer like Walmart to find itself.
“For sure, people use this money to shop in our stores,” Ward noted. “Having customers come into our stores and collect cash — they’re going to buy a few items while they’re there.”
And, in fact, Ward said, Walmart in the next few weeks expects to see a spike in such activity.
“You would be surprised to see how many people send cash to their mothers on Mother’s Day, especially given how scattered families are these days,” Ward noted. “As holidays go, it is one of our biggest times of the year for money transfers.”
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