by Christopher Freeburn | May 8, 2013 10:22 am
Walmart‘s (NYSE:WMT) move into pre-paid debit cards has drawn opposition from a number of banks and financial services providers.
The lenders, acting through the Federal Advisory Council (FAC), has urged the Federal Reserve to extend greater regulatory oversight to Walmart’s card services. The group accused the nation’s largest retailer of entering “banking through the back door” after its earlier efforts to start its own bank were blocked, Bloomberg noted.
In 2005, labor unions, consumer advocacy groups and bankers united to prevent Walmart from opening a limited-service bank in Utah. Since then, the company has been slowly expanding the range of financial services it offers, most notably through the issuance of pre-paid cards. The FAC claims that those cards function as alternatives to traditional debit and checking accounts, allowing the retailer to offer banking services without proper regulatory scrutiny.
The FAC is asking the Fed to restrict payment services to lending institutions that comply with existing regulations, namely members of the FAC, which include PNC Financial Services (NYSE:PNC) and BB&T Corp. (NYSE:BBT).
Walmart has partnered with American Express (NYSE:AXP) and JPMorgan Chase (NYSE:JPM) to issue pre-paid cards.
A spokesperson for Walmart told Bloomberg that financial services offered by the retailer were properly regulated through its financial services partners.
Shares of Walmart edged up slightly in Wednesday morning trading.
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