Wal-Mart begins banking in Mexico

Wal-Mart Stores Inc., which was unable to attain a bank charter in the US, already has 22 locations of Banco Wal-Mart in Mexico, and is expected have at least 80 by the end of the year.

"What you find in Mexico is the type of people who shop there often don't have the regular checking accounts," said Refugio Rochin, a professor of Chicana/Chicano Studies and an economist at the University of California at Davis. "So if Wal-Mart is installing something that allows the buyers to have credit, it makes sense that buyers could also take advantage of the Wal-Marts for banking."

Wal-Mart considered the risk to the company in loaning money, and has a program to reward customers who pay on time. The plan works like this: In a 12-month payment plan, if the customer isn't late, Wal-Mart will give the customer a gift card loaded with the amount of the last monthly payment, explained Wal-Mart spokesman Kevin Gardner.

Wal-Mart Watch, a nonprofit advocacy group in Washington, DC, isn't happy with Banco's interest rates. Interest on the savings accounts is 1% and interest on consumer loans, which can be used only to buy Wal-Mart items, is 75% annually.

Earlier this month, the US Senate Banking Committee approved a bill that would prevent retailers from owning the sort of limited bank charters that Wal-Mart previously had sought, just as they are prevented from owning commercial banks. The bill now is headed to the full Senate for a vote, but a date hasn't been set.

If the bank ban passes, Wal-Mart doesn't appear to mind. Wal-Mart is instead focused on growing its Mexican bank.

(Source: Plain Vanilla Shell)