In 2023, Walmart notched a whopping $611 billion in revenue — a 6.7% increase from an already impressive 2022. So when Walmart recently indicated its desire to cut out payment companies, the news garnered headlines.
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In fact, the retail behemoth said it would soon offer a new payment option where consumers could opt for instant bank account transfers instead of using a credit or debit card. This move would likely spike revenue for the leading company on the Fortune 500 even further, as it would not have to pay payment processing fees to credit card merchants for these purchases.
While this move clearly makes financial sense for Walmart, is it the best option for consumers?
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The Benefits of Bank Account Transfers
In a bank account transfer, money is moved from one bank to another. This can happen in person, through a mobile app, online or by phone. For Walmart, it will be offered to online shoppers, according to The Daily Upside.
Bank account transfers have several key benefits:
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They are safe. Bank account transfers are a secure form of payment protected by encryption to reduce and prevent fraud. They are also very easy for consumers and businesses alike to track.
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They prevent unwanted interest payments. More than half of U.S. adults fail to pay their credit cards in full each month, leading to costly interest payments, according to Federal Reserve data. When consumers use a bank account transfer instead of a credit card, they are paying with money they already have. This simple shift can save individuals and families thousands of dollars in the long run.
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They are convenient. Bank account transfers come in multiple forms, including online and mobile options. In addition, this payment option is fast and typically free.
The key downsides to consumers are loss of credit card rewards points and potential overdraft fees, but Walmart reported that its bank account transfer pilot program has already drawn rave reviews from participants.
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Where Walmart Is Today and Where It’s Going Tomorrow
In early 2024, Walmart launched the Walmart Pay function in its app. However, these automated clearing house (ACH) payments often took up to three days to process. Rather than being a win-win for Walmart and its customers, this function cost the company money and frustrated customers, who had to guess when payments would hit their accounts. When Walmart launches bank account transfer or pay-by-bank in 2025, it will partner with Fiserv, a global provider of payments and financial services technology solutions, to support rollout, functionality and overall service.