Walmart’s MoneyCard: Still nothing to celebrate
American Banker’s Maria Aspan has sent a love letter to Jane Thompson today, giving her the “banking innovator of the year award” for her achievements at Walmart:
Jane Thompson is not a banker. But during her nine years running Wal-Mart Stores Inc.’s financial services unit she did more than any single bank or banker in the country to develop and sell affordable financial products to low-income customers.
Annoyingly, Aspan doesn’t go into much detail about what exactly these “affordable financial products” are, or how they compare in price to the alternatives. But there’s one product in particular which she singles out for praise.
In 2007, Wal-Mart introduced the MoneyCard, a prepaid card that customers can fund with their paychecks or cash and use like a traditional debit card, without having an existing checking account. Thompson calls it her favorite product.
This comes as a surprise to me. When the MoneyCard was launched, in 2007, I called it a rip-off. And I’m sad that technical glitches have caused all the comments to be deleted from that post, because there were a lot of them, and they tended towards the very angry. As Stephen Vanderpool writes,
A quick perusal of relevant message boards will yield thousands of Green Dot and WalMart MoneyCard customer complaints. A good chunk of these complaints involve the complete loss of deposited money. People usually don’t respond well when their funds go missing. Another big complaint category is refunds gone wrong. With startling frequency, attempts to return merchandise seem to result in no refunds issued.
Contrast this the scarcity of complaints surrounding the Western Union MoneyWise card. Granted, there are a lot more MoneyCards and Green Dot cards floating around out there, but the difference is disproportionate. This may be due to the apparent absence of Green Dot customer service. People aren’t getting their questions answered or their issues resolved.
It’s worth noting that although Walmart is getting the credit from American Banker, the MoneyCard is actually operated by Green Dot, which was sued in May by Florida AG Pam Bondi for possible deceptive and unfair practices, including failure to disclose fees. And I can’t find much in the way of independent praise for the product. Vanderpool, for one, finds the MoneyWise card to be clearly superior to the MoneyCard, and writes:
The WalMart MoneyCard, developed by Green Dot, charges an activation fee, a monthly fee, and a deposit/reload fee that stand at $3 apiece (direct deposit is free). The ATM fee is $2, and it’s another $1 for a simple balance inquiry. Those are some pretty hefty charges, just for the privilege of carrying the card around.
These fees are also far from transparent: on the web page describing the MoneyCard, for instance, there’s no mention of fees at all. And finding the page with the fees is basically impossible, because there isn’t one. In order to find the fees, you have to bring up the 12,000-word cardholder agreement, which starts off not by listing the fees, but rather by entering into legalese defining the word “Agreement” to refer to “This Cardholder Agreement”.
My opinion hasn’t changed since 2007: I don’t like this card, even though I do like the idea of Walmart banking America’s poor. The company does a good job of banking in Mexico, and it’s sad that it can’t do the same here. But the MoneyCard is not a good alternative to a bank account, or even to other prepaid cards. (It’s significantly worse than, say, the prepaid cards which California uses to distribute its unemployment and disability benefits.) So I find this American Banker article rather odd.