NEW YORK (AP) — Wal-Mart is delving deeper into financial services at its stores and shaking up the money transfer business.
The world's largest retailer introduced a new money transfer service Thursday that it says will cut fees for its low-income customers by up to 50 percent compared with similar services elsewhere. The Walmart-2-Walmart service is being rolled out in partnership with Ria Money Transfer, a subsidiary of Euronet Worldwide Inc.
Shares of MoneyGram and Western Union plunged almost immediately Thursday after the announcement.
The service, which will be available starting April 24, allows its customers to transfer up to $900 to and from more than 4,000 Wal-Mart stores in the U.S.
It's a huge footprint that could reshape that industry and is likely to set off a pricing battle.
Customers can transfer up to $50 for a $4.50 service fee and up to $900 for $9.50.
Comparable services elsewhere cost up to $70 when transferring less than $1,000, according to Wal-Mart.
Western Union on its website puts the price of transferring $900 in New York between $20, if using a bank account, to $85 if using a credit or debit card.
Wal-Mart's announcement is the latest way it's acting more like a bank. About a decade ago, Wal-Mart applied unsuccessfully for an industrial bank charter. Those efforts were blocked even though the retailer vowed it would not open retail branches but wanted to use its bank to process card transactions. In 2007, it abandoned those plans, but it has been creating an expanding menu of financial offerings for customers, aimed particularly at those with limited access to banks. Wal-Mart already offers prepaid cards, check cashing services and tax preparation services.
Shares of MoneyGram International Inc., which could get hit the hardest, fell more than 15 percent to $15.25 in midday trading. MoneyGram is the company that currently provides money transfers to Wal-Mart. The stock of Western Union Co., its rival, fell nearly 6 percent to $15.19.
MoneyGram could not be reached immediately for comment. But in a statement emailed to The Associated Press, Western Union said, "Our retail product and service offerings today are already quite diverse. "
Western Union noted that people have the flexibility to send money in minutes or next day from a retail agent location or online and they can also send money directly into a bank account.
"The company is well positioned in the U.S. domestic money transfer space, having offered a fee of $5 for $50 since 2009," Western Union added.
Wal-Mart is aggressively trying to increase foot traffic in its stores after seeing comparable-store sales decline for four consecutive quarters.
The Walmart-2-Walmart service may help stem that trend, giving customers just one more reason to spend more time inside Wal-Mart.
Daniel Eckert, Wal-Mart's senior vice president of services, said that the move into the money transfer business gained momentum after company officials heard complaints from customers about high fees elsewhere. He acknowledged in a conference call Thursday that the program could bring more customers into stores, but he insisted that the goal is to offer shoppers more financial choices.
Eckert told reporters that it didn't alert MoneyGram that it was teaming up with Ria, but said that for more than a decade Wal-Mart has had a strong partnership with MoneyGram and that it renewed its contract in 2012. He pointed out that MoneyGram has no money transfer limits and customers can transfer funds outside the U.S. using its services.
"Walmart-2-Walmart brings new competition and transparent, everyday low prices to a market that has become complicated and costly for our customers," Eckert said.
According to a 2011 study conducted by the Federal Deposit Insurance Corp., 29 percent of American households do not have a savings account, while about 10 percent do not have a checking account.
Shares of Wal-Mart Stores Inc., based in Bentonville, Ark., rose 32 cents to $77.54 in trading Thursday.