Wal-Mart Stores Inc. announced its own money transfer service Thursday in a venture with Euronet Worldwide Inc. of Leawood.
Called Walmart-2-Walmart, the money transfer business will allow consumers to send money between any of 4,000 Wal-Mart stores in the United States. Euronet’s Ria Money Transfer business will provide the infrastructure to handle the service.
In a conference call, Wal-Mart senior vice president Daniel Eckert said this would save customers money for a service that comes “at times with a hefty price tag.” Consumers with little or no banking services, members of the military and workers in oil fields are frequent money transfer users, Eckert said.
Wal-Mart said its money transfers, available starting April 24, would cost $4.50 for up to $50 transferred and $9.50 for up to $900 transferred. Larger money transfers would be available through other services at Wal-Mart.
The $900 limit allows Wal-Mart to avoid the expense of securing and reporting to banking regulators the identity of the money transfer senders. Eckert said that allows the company to keep the cost down.
Juan Bianchi, chief executive of Ria Money Transfer, said the $900 limit applies to an individual for the day but should not disrupt most users.
“When we designed the product, we looked for the product attributes that would serve the majority of customers,” Bianchi said.
Money transfer receivers can collect the funds with a standard form of ID, but Bianchi said another way is allowed as well. The sender can set up a security question that the receiver would be able to answer to retrieve the transferred funds.
Euronet is better known for operating networks of automated teller machines around the globe. It acquired Ria Money Transfer in 2007 for $500 million, according to analyst Peter Heckmann with AvondalePartners LLC.
Heckmann had said in an email ahead of the announcement that Euronet would benefit significantly from a wire transfer agreement with the big retailer.
After a conference call the companies held, Heckmann estimated Euronet could collect between $100 million and $150 million in new revenue from the partnership. He notes that Wal-Mart’s money tranfer rates undercut Moneygram’s transfer fees. And Moneygram said it earned roughly $190 million in revenues for money transfers between Wal-Mart stores last year, Heckmann said.
Money transfers generated 26 percent of Euronet’s total revenues last year, or roughly $367 million.
The companies did not offer information about the amount of business the partnership is likely to create.
Euronet shares rose $1.65, or 4.1 percent, to $42.44.
Shares of Moneygram International Inc. and Western Union, which are larger rivals in the money transfer business, fell sharply on the news of Wal-Mart’s partnership with Euronet.
Western Union, in an email to The Associated Press, said its customers could send money in minutes or the next day from a retail agent location or online, and they could send money directly into a bank account.
“The company is well positioned in the U.S. domestic money transfer space, having offered a fee of $5 for $50 since 2009,” Western Union said.
Heckmann said Wal-Mart had negotiated a new deal with Moneygram that allowed Wal-Mart to offer money transfers under its own brand through another money transfer business.
Wal-Mart said Moneygram transfers would still be available in its stores for money transfers outside the U.S. and larger than $900.