The Promise of Financial Services
Walgreens prepaid debit card opens door to convenience store banking
Published in CSP Daily News
WASHINGTON -- A new Walgreens Drug Store in Washington, D.C., is catching consumers’ eyes for many reasons: frozen yogurt, a juice bar, a manicure station, a selection of craft beers, a health-care clinic, a "yoga needs" aisle, refrigerated displays full of fresh prepared food. But it’s what’s coming soon that stopped a Washington Post reported in her tracks: a bank
Earlier this month, the newspaper reported, Walgreens announced that it was rolling out a prepaid debit card at all of its 8,541 locations, including Duane Reades, by the end of the year. And not just a run-of-the-mill rechargable piece of plastic: This one will be able to do online bill payments, check cashing and direct deposit of paychecks.
It's only $2.95 to join, and ATM withdrawals will be free at machines inside the stores, with a $2.95 fee for those outside of it. “For people without a bank account--and there are 10 million of them, as of 2011--dropping into a Walgreens could become the easiest way to manage their finances,” the newspaper reported.
That lends a whole new meaning to the term "convenience store." It could also shift the ways in which people on the economic margins plan for the future, the newspaper reported.
Banks themselves have been offering prepaid debit cards for years now as a way to get at the unbanked. According to the Federal Reserve Bank of Boston, they're the fastest-growing segment of the payment industry; about a third of American households used some sort of prepaid card in 2009, and in 2012 they transacted $77 billion. (The growth is also fueled by a rule that kicked in earlier this year requiring recipients of some federal benefits to accept them in electronic form). It's easy to understand the appeal: They function in most ways like a regular debit card, except you don't have to go through the hassle of opening a regular bank account, and won't be burned by overdraft fees.
For a retailer, the upside is even greater. If you can provide a form of payment that has built-in rewards for shopping in your stores, you've created customers with a strong loyalty bias toward your products. Wal-Mart recognized this a while ago and introduced its Bluebird card, which Consumers Union gave top marks in a review of the industry this summer.
Click here to read the complete Washington Post article.