Wal-Mart Stores Inc. Wednesday cut the fees associated with its prepaid debit card in a bid to capture banks' checking and credit card customers. The Bentonville, Ark.-based retailer reduced the up-front, reload and monthly fees to $3 each for the MoneyCard, which it introduced in 2007. "We thought we were helping people who were unbanked, and this card is good for them. But it's also good for people who are banked and have low balances and get more than their share of fees, and for those who are using them as an alternative to credit," Jane Thompson, president of Wal-Mart's financial services business, tells CardLine sister publication American Banker. "We're pro-banking, we want banks to succeed. … But there's a group with low balances in their bank accounts, living too close" to bouncing checks "that will benefit from this." Roughly 9 million households pay more in overdraft or other fees associated with their checking accounts than they would in prepaid card fees, according to a report released by the Boston consulting firm Aite Group LLC last week (CardLine, 2/11). Observers agreed that Wal-Mart's repricing, while potentially luring customers from other prepaid providers, will have more of an impact by attracting new cardholders. "I don't think it's going to automatically drive prices down across the industry overnight, but I do think it's going to help Wal-Mart pick up some significant market share," says Jennifer Tescher, director of the Center for Financial Services Innovation, a nonprofit affiliate of Chicago's ShoreBank Corp. "Penetration in this country is still tiny. I don't think they're taking it away from anyone. They're actually going to bring new consumers into the prepaid market."

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