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Wal-Mart bank approval will hurt independent bankers, analysts say

April 12, 2006

CNN Money:In ongoing hearings before regulators in Washington this week, Wal-Mart executives pledged that the discounter has no interest in opening Wal-Mart-branded bank branches. Rather, it's seeking regulatory approval to set up a "limited" purpose bank that will save the retailer millions in payment processing fees. (Read also, Banks fight Wal-Mart's application for bank charter.) Although Wal-Mart doesn't publicly disclose its processing fees, some analysts estimate it could range anywhere from a couple of cents to about 50 cents or more per transaction. The more costs Wal-Mart can take out of the system, the more savings it can pass on to consumers, said Bart Narter, an analyst at Boston-based Celent.

And despite its many protestations to the contrary, banking industry insiders, analysts and union-backed Wal-Mart watchdogs groups believe that if Wal-Mart wins approval for an industrial bank, it will eventually expand into retail banking, a move that could "shake-up the banking industry." Rob Markey, head of Bain & Company's global customer strategy practice, said there's already sufficient evidence to suggest Wal-Mart has a strong interest in the financial services industry.

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