Walmart's increasingly dominant market-share in the check-cashing business is the subject of a fascinating story in the Boston Globe:
Walmart charges $3 to cash a check of up to $1,000, compared with as much as $25 at other check-cashing services and the $7 that many banks charge people who don't have accounts with them....
Eugene Campbell, 36, a freight worker from East Providence, recently stopped by customer services in the Walmart in Walpole to cash a paycheck from one of his two jobs. Campbell, the father of four, said that after being hit by a series of fees that snowballed into $700 during one month, he decided to leave his bank and get rid of most of his bank accounts.
"It's cheaper than anything out there and there are no overdraft fees," he said of Walmart. "I've never had a problem."
But bank executives do. They say that Walmart can offer low prices on financial services because the chain has cherry-picked services not subject to the layers of regulation that banks face.
Unlike check-cashing services, banks are required to lend in urban and suburban communities, provide direct insurance on deposits, and make detailed reports to several federal and state agencies, said Richard Holbrook, chairman of the Massachusetts Bankers Association and chief executive at Eastern Bank.
"We're not afraid of competition," Holbrook said. "We just want to make sure the rules are the same."
The line "we're not afraid of competition" from that banker made me chuckle. Of course he's afraid of competition, which is why the banks are working to get regulators to prevent Walmart from competing with them. The regulators will probably do what the banks ask, and pile more rules on Walmart, because the competition from Walmart demonstrates that competition works better for consumers than regulation does, which is not a point regulators are eager to make. Notice that when people say "we just want to make sure the rules are the same," they usually aren't talking about reducing rules, but increasing them.
