Is Wal-Mart partnering with Tax Products Group and Republic Bank & Trust Co. to start a tax service? It is quite possible. Wal-Mart is taking another step towards providing financial services beyond its money transferring services that it started last year. Wal-Mart is now moving forward with providing tax services. The program is called “Direct2Cash” and it is aimed for those with low incomes, especially those who don’t use a bank for deposits and those who use check cashing services. The FDIC had found that 28% of American households do not have a bank, let alone a bank account.
The offering, called Direct2Cash, allows tax filers to bypass checks and direct-deposit options. The service is available through tax-preparation providers at more than 25,000 locations, including 3,000 Wal-Mart stores, which may charge a fee up to $7. The money is then picked-up at Wal-Mart stores after customers’ identities are verified.
Not only does this service help attract customers to Wal-Mart, but that it also may entice those who use the service to purchase products or goods. With cash in hand, customers may feel the want/need to splurge a little bit or possibly a lot, depending on the personality. While Wal-Mart may provide the service, they will not be charging a fee. They will be covering both, federal and state taxes with refunds up to $7,500.
I find this to be a very unique step for Wal-Mart and possibly one step that may be a giant leap to success, but it doesn't fit their slogan "Save money. Live Better." To start, Wal-Mart is not going to charge a fee, but that the other two companies may charge a fee up to $7. That is pretty cheap for those who don’t do their own taxes that use companies like H&R Block. Furthermore, providing a refund of up to $7,500 is also going to attract those that may not have much write-offs, deductions, and assets that are not part of the low-income bracket. Also, people may not want to wait for the direct deposit or receiving a check in the mail from the Department of Treasury. Some people just want cash in hand. Additionally, this service is good for marketing and to entice consumers to spend their tax refund at Wal-Mart, especially since it is cash that the consumer will be receiving. I think that Wal-Mart is pulling off a good marketing tool to get people to spend money at the store. Realistically, the consumer has a 50/50 chance of either spending or not spending their tax refund. However, there are a few things that are not clear. How does the processing work? Will the tax companies that are a partner with Wal-Mart use a voucher system? Will this be a seasonal business (considering that some people will get extensions, filing amendments, etc.)?
Fellow monkeys’, what are your thoughts about this step that Wal-Mart is taking towards providing financial services? Do you think that it will be a success and become a strong competitor against other tax companies? Do you see any legal, ethical, or immoral problem with this or any that may be forthcoming in the future? Since Wal-Mart is using this as a marketing tool, do you think that this an excellent way to help boost profits and sales?
Source: Wall Street Journal, Wednesday, January 21, 2015, Money & Investing Section, page C3.
They will have some gimmick where the money can immediately be transferred onto a Wal-Mart gift card or whatever, and try to provide an incentive for the customer to use the money there. Since a lot of lower income people just spend their refund, I'm sure Wal-Mart will be expecting them to buy a big screen tv or an Xbox, and they can snatch up that demand with an immediate store credit. I'm thinking that pretty soon they'll be doing car title loans. Bet there will be three times as many WM employees at the tax dept than working the checkouts.
I doubt Walmart will want to get into the repossession game with car title loans. That is unless they can outsource it and if that was the case it would be incredibly profitable.
Actually, they are not giving gift cards out. The program has Wal-Mart giving them cash in hand, allowing them to bypass checks and direct deposits. The question remains if there will be a voucher system considering that an individual will need to be identified before money can be lent to them.
Et doloribus et et commodi sit et dignissimos. Amet eius voluptatem similique beatae ut. In voluptatem eveniet aut. Perferendis ducimus qui ullam. Enim quidem nobis dignissimos qui a. Dolorem sit rem quaerat error. Laboriosam quia sint inventore illum magni qui ut dicta.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...