Walmart, and Banks, Late to "No Overdraft Fee" Sea Change

The announcement by Walmart to partner with GreenDot’s GoBank and market accounts with “no overdraft fees ever” has been stealing headlines and attention.  But that horse has already left the barn.  “No overdraft fees ever” transactions already represent nearly 25% of transactions, as reported by the Federal Reserve Bank of Philadelphia.  They show that 25% of households use prepaid card, and nearly all are banked.  In fact, the highest incidence of prepaid use is among Millennials making over $100,000 a year.

Why do they use prepaid?  The research is clear and it is the key marketing offer of prepaid:  avoid overdraft fees and budget carefully.  More consumers today want to be be turned down for transactions when money is not in accounts.

Why Consumers Use Prepaid

While many bankers and analysits postulate on the impact of Walmart’s strategy, one quarter of the transactions of bank accounts have already "left the barn," along with their related revenue.  And the reason is simply because banks do not offer accounts with no overdraft fees ever, not even return check charges.  Many think they are protecting their overdraft fees, but in fact the segment needs are different.  The impact of Walmart and GreenDot’s GoBank will not be a sea-change, but will add to sea-change that has already occurred.

Those that want to win in revenue and customer growth would be well-served to see the success of clients offering the PaySound® Checking Plan with no overdraft fees ever!