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Or at least that's what they want to happen.. For the moment they simply want to process their credit and debit trasactions but soon a Walmart Bank will be on every corner with discount banking. Perhaps they will have a handy grocery section in them. 
edit: added link
WASHINGTON (Reuters) - Wal-Mart on Monday defended its bid to open a limited-purpose bank and took aim at one of the most regularly voiced concerns about its proposal, saying it has no plans to open branches and it is committed to keeping independent banks in its stores.
At the first of four days of public hearings on Wal-Mart's widely watched bank application, the company confronted concerns raised by its aggressive opposition, including some members of Congress and community banks, as well as those who regularly criticize the company, such as labor and environmental groups.
Jane Thompson, president of Wal-Mart Financial Services, said the retailer had abandoned previously contemplated plans to move into retail banking and now wants to start financial operations solely to process its stores' electronic payments.
"We have absolutely no plans to open bank branches," she said at the hearing.
"Our commitment not to branch and our independent in-store branch strategy is not simply a promise; it is a very visible and rapidly growing reality, locked in by hundreds of long-term contracts," she told the Federal Deposit Insurance Corp., or FDIC, the regulatory agency reviewing the retail giant's bank application.
But critics said they simply don't buy it.
"Wal-Mart does nothing on a small scale," Terry Jorde, chairman of the Independent Community Bankers of America, told the FDIC panel holding the hearing. "We respectfully suggest that Wal-Mart's recent history belies the assertions made in its narrow application, justifying our skepticism that Wal-Mart will honor the business plan as filed for very long."
Opponents say Wal-Mart already has the structure to rapidly ramp up operations if it decides, and if regulators allow it, to one day open retail branches in its more than 3,000 stores.
That could threaten community banks, according to trade groups that say Wal-Mart has the size and resources to lower prices long enough to drive small banks out, and then raise prices once it dominates the market.
LIMITED PLANS
The bid from the world's largest retailer has generated an unprecedented level of opposition to a bank application -- so much, in fact, that the hearing was held in a Washington suburb to accommodate large numbers of attendees and possible protests. Neither materialized.
Wal-Mart's bank, known as an industrial loan company or ILC, would process electronic payments from its stores -- transmitting payment requests from shoppers to credit card issuers and then transferring payments back to Wal-Mart. As such, Wal-Mart's bank would be a conduit for payments.
Bringing this function in-house is expected to generate $10 million in revenue by the third year of operation -- a small fraction of Wal-Mart's total revenue. But it reduces what Wal-Mart says is the inefficiency of paying a third party to pass information between stores and customers' banks.
"That activity is what this is about," Ray Bracy, vice president of corporate affairs, told Reuters. "It's about looking at inefficiencies in the process."
Industrial banks are state-chartered and state-regulated, and fall under the FDIC's supervision. Commercial companies may own them because federal laws that bar nonfinancial companies from engaging in banking do not classify ILCs as banks.
Wal-Mart's application says its bank will not serve the general public or offer payment services to other retailers. If Wal-Mart wants to change its business plan after the initial three-year period, it would need to return to the FDIC for approval.
Still, opponents on Monday consistently dismissed the idea that Wal-Mart's promises, its three-year business plan and any FDIC restrictions that may be placed on the bank would stop Wal-Mart from reaching beyond its stated intentions.
WAL-MART'S CHARACTER
While some critics focused on the potential impact of a Wal-Mart bank on smaller banks and the payments system, others accused the company of violating labor laws and engaging in unsavory business practices -- a point the company contests.
Others said Wal-Mart's bank would violate the historic separation of banking and commerce in the United States.
Some, including Federal Reserve officials, have urged Congress to clamp down on industrial banks because they benefit from a "loophole" in federal law that lets commercial companies buy banks, but escape full supervision by bank regulators.
But that issue, according to some policy analysts, is beyond the scope of the FDIC's consideration of Wal-Mart's application.
In fact, if the FDIC follows statute and precedent, there is little reason Wal-Mart's bid should be denied when rival Target Corp. and other corporate heavyweights such as General Electric have succeeded, analysts have said.
The FDIC has no deadline for deciding on the Wal-Mart application, which was filed in July 2005.
At the first of four days of public hearings on Wal-Mart's
Jane Thompson, president of Wal-Mart Financial Services, said the retailer had abandoned previously contemplated plans to move into retail banking and now wants to start financial operations solely to process its stores' electronic payments.
"We have absolutely no plans to open bank branches," she said at the hearing.
"Our commitment not to branch and our independent in-store branch strategy is not simply a promise; it is a very visible and rapidly growing reality, locked in by hundreds of long-term contracts," she told the Federal Deposit Insurance Corp., or FDIC, the regulatory agency reviewing the retail giant's bank application.
But critics said they simply don't buy it.
"Wal-Mart does nothing on a small scale," Terry Jorde, chairman of the Independent Community Bankers of America, told the FDIC panel holding the hearing. "We respectfully suggest that Wal-Mart's recent history belies the assertions made in its narrow application, justifying our skepticism that Wal-Mart will honor the business plan as filed for very long."
Opponents say Wal-Mart already has the structure to rapidly ramp up operations if it decides, and if regulators allow it, to one day open retail branches in its more than 3,000 stores.
That could threaten community banks, according to trade groups that say Wal-Mart has the size and resources to lower prices long enough to drive small banks out, and then raise prices once it dominates the market.
LIMITED PLANS
The bid from the world's largest retailer has generated an unprecedented level of opposition to a bank application -- so much, in fact, that the hearing was held in a Washington suburb to accommodate large numbers of attendees and possible protests. Neither materialized.
Wal-Mart's bank, known as an industrial loan company or ILC, would process electronic payments from its stores -- transmitting payment requests from shoppers to credit card issuers and then transferring payments back to Wal-Mart. As such, Wal-Mart's bank would be a conduit for payments.
Bringing this function in-house is expected to generate $10 million in revenue by the third year of operation -- a small fraction of Wal-Mart's total revenue. But it reduces what Wal-Mart says is the inefficiency of paying a third party to pass information between stores and customers' banks.
"That activity is what this is about," Ray Bracy, vice president of corporate affairs, told Reuters. "It's about looking at inefficiencies in the process."
Industrial banks are state-chartered and state-regulated, and fall under the FDIC's supervision. Commercial companies may own them because federal laws that bar nonfinancial companies from engaging in banking do not classify ILCs as banks.
Wal-Mart's application says its bank will not serve the general public or offer payment services to other retailers. If Wal-Mart wants to change its business plan after the initial three-year period, it would need to return to the FDIC for approval.
Still, opponents on Monday consistently dismissed the idea that Wal-Mart's promises, its three-year business plan and any FDIC restrictions that may be placed on the bank would stop Wal-Mart from reaching beyond its stated intentions.
WAL-MART'S CHARACTER
While some critics focused on the potential impact of a Wal-Mart bank on smaller banks and the payments system, others accused the company of violating labor laws and engaging in unsavory business practices -- a point the company contests.
Others said Wal-Mart's bank would violate the historic separation of banking and commerce in the United States.
Some, including Federal Reserve officials, have urged Congress to clamp down on industrial banks because they benefit from a "loophole" in federal law that lets commercial companies buy banks, but escape full supervision by bank regulators.
But that issue, according to some policy analysts, is beyond the scope of the FDIC's consideration of Wal-Mart's application.
In fact, if the FDIC follows statute and precedent, there is little reason Wal-Mart's bid should be denied when rival Target Corp.
The FDIC has no deadline for deciding on the Wal-Mart application, which was filed in July 2005.
edit: added link
The only concern I have is how well it can work under the banking legislation. Normally banks are incorporated and regulated under different laws to other companies.
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