Wal-Mart Stores Inc. plans to expand the number of stores in which it will cash government and payroll checks, and it has signed a bigger deal with its check-cashing and verification vendor, Certegy Inc., to do so.
Melissa Berryhill, a Wal-Mart spokeswoman, said the service started out as a pilot in 2002 at some stores and has proven popular enough to become a fixture everywhere. "We realized there was a customer demand, and it is rolling out to our chain now. We offer it because we want to offer customers a convenience."
The service allows customers to bring a paycheck or a tax refund or other government check for up to $1,000 to any cash register in a participating store. Wal-Mart employees can cash their checks for free; everyone else must pay a fee of $3 (in some states) or 1% of the check amount, up to a limit of $3 in states that require percentage-based fees.
The expansion was announced Tuesday.
Ms. Berryhill said the service, currently available at 2,800 Wal-Mart stores in the United States, will be available in all 3,000 U.S. stores by yearend as Wal-Mart obtains licensing approval in more states.
She would not say how much revenue the service generated or whether it was profitable, but she did suggest that Wal-Mart has found a good business case for the service. "We don't just do something to say we are doing it," she said. "We know what our competitors are charging. We think our fee shows our value."
Lee Kennedy, the chairman, president, and chief executive officer of Certegy, asserted that government check-cashing is one of the most successful payment programs Wal-Mart has initiated.
"The check-cashing gets the customer into the store on a repetitive basis," he said Tuesday morning in a presentation at Bear, Stearns & Co.'s 15th Annual Technology conference. "Once they are in the store cashing checks, hopefully they will stay there."
The service had a special appeal because around 20% of Wal-Mart's customers are either unbanked or "underbanked," Mr. Kennedy said.
Certegy, of Alpharetta, Ga., also handles some e-commerce transactions for Wal-Mart; for the past year it has processed electronic checks for customers who pay for goods directly from their deposit accounts.
Mr. Kennedy said the accuracy of Certegy's fraud detection systems has helped secure the contracts with Wal-Mart and other big chains, including Best Buy Co. Inc. and Circuit City Stores Inc.
Edward Neumann, the managing director of consulting services at Javelin Strategies and Research in Pleasanton, Calif., called the expansion of Wal-Mart's service "an important move for the industry" that could drive down prices.
