In a number of Wal-Mart stores, customers looking to buy moneyorders, cash checks or pay bills find themselves faced with achoice: credit union or Money Center?

Wal-Mart Money Centers, present in nearly 875 stores, offerproducts designed to reach low- and moderate-income clientele.Could the centers be bad for credit unions with in-storebranches?

Synergistics Research Corp. CEO William McCracken thinks so. Hewarned credit unions and banks that the Money Center model “poses acompetitive threat because of the degree of comfort it provides toa segment of consumers” who do not use basic banking services likechecking but make frequent visits to the stores and are morecomfortable with reloadable plastic.

McCracken said he knows of a number of banks that have closedtheir Wal-Mart branches because they were not getting enough foottraffic, with potential customers “going next door to the MoneyCenter.”

Envision Credit Union, based in Tallahassee, Fla., has had mixedluck with its Wal-Mart branches. Senior Vice President Al Hammocksaid one branch had a lot of traffic, deposit volume andtransactions, but no loans. Therefore, the credit union decided inJune to consolidate it with one of its traditional branches and isconsidering doing the same with another in-store branch.

However, Hammock said Envision's Wal-Mart branch inCrawfordville, Fla., “is doing just great and is buildingmembership.”

Another Florida credit union, Miramar-based Tropical Financial,said it is enjoying a supportive spirit from Wal-Mart, as well ashealthy profits. “The break even for a Wal-Mart branch is $12million, but we have seen volume reach to $30 million,”President/CEO Gregory Blount said. However, similar to Envision'ssituation, “Loan demand is not where we would like it to be rightnow.”

For Desert Schools Federal Credit Union in Phoenix, the forecastfor its 25 Wal-Mart branches is sunny-with a chance of rain. Aspokesman for the credit union said it has maintained “excellentrelations” with the retailer over the years but recently hasnoticed “crossover” money order competition, with 1% of businessdrawn away to the retailer.

As for the Money Centers themselves, business is booming. TheCentral Penn Business Journal reported that sales of the MoneyCenter MoneyCard, a Visa-branded debit card, nearly tripled afterits upfront price was reduced from $8.94 to $3.00. “We are on trackto have more than two million that we've sold this year,” Wal-MartFinancial Services President Jane Thompson told the paper.

She doesn't believe Wal-Mart is in direct competition withbanks; customers will simply go where they feel most comfortable.“I think we're also understanding the needs of customers that areliving paycheck to paycheck better than anyone else,” Thompsonsaid.

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