Wal-Mart will be granting its customers their tax refunds in cash for a little or no fee. This is the latest financial service that the largest retailer in the world will offer.
The launch of the service Direct2Cash aims to have more shoppers enter their stores and use the tax refunds that they receive in cash to shop in Wal-Mart.
Direct2Cash allows customers filing their taxes to bypass options of receiving their tax refunds through checks and direct deposits, instead receiving the refunds in cash. The service can be availed through tax preparation providers in over 25,000 locations, including 3,000 Wal-Mart stores.
The cost of the service varies, but the maximum amount is only $7. For customers picking up their cash at Wal-Mart, the retail giant will charge no fee at all.
Participating partners of Direct2Cash may offer the service to customers during the time of filing of taxes. Customers will then be receiving a confirmation code, which should be presented at a Wal-Mart store. After confirming the customer's identity, the tax refund will be released in cash.
Wal-Mart has recently launched a strategy to offer financial services to the company's core low-income customers, most of which are not part of the country's traditional banking system. In 2014, Wal-Mart launched a money transfer service for the United States, and the company is also offering services for the encashment of checks and payment of bills, among others.
About 28 percent of households in America are either "unbanked" or "under-banked," as reported by a 2014 study of the Federal Deposit Insurance Corporation. This means that more than a quarter of the households in the country do not own accounts in banks or have never used check encashment services.
Companies that turn checks to cash normally charge the service with a percentage of the amount of the check, in addition to a processing fee.
The launch of Direct2Cash also fulfills one more goal for the retail giant for the tax season, which is to get more shoppers into their stores while the customers have cash to spend on hand.
"It's always a good thing for us to have customers in our stores that have jingle in their purses and their wallets," the company said.
More customers are not just a bonus, though, as there is a sense of urgency for Wal-Mart to bring in more shoppers. Customer traffic at Wal-Mart's stores in the United States have decreased for two consecutive years, and sales have also become sluggish.
Wal-Mart is currently working with Republic Bank & Trust Co. and Tax Products Group to set up the Direct2Cash service. Tax refunds of up to $7,500 can be processed through the service.