Wal-Mart Rolls out Free Tax Prep at Stores
Finkle, Victoria, American Banker
Byline: Victoria Finkle
Wal-Mart Stores Inc. is partnering with tax preparation companies Jackson Hewitt Inc. and H&R Block Inc. to offer free tax prep at more than 3,000 stores, in a move that could boost deposits on the retailer's prepaid card.
Wal-Mart, like its two tax-preparation partners, sells prepaid debit cards that its customers can use instead of traditional debit cards or bank accounts. By partnering with the tax companies, Wal-Mart will now be able to encourage those customers to get their tax refunds loaded directly onto their cards, instead of via checks.
That could be a limited but significant boost for Wal-Mart's prepaid program. Tax refunds provide a one-time but sometimes lucrative source of funds for consumers each year, especially for low-income taxpayers who can take advantage of certain tax credits. Low-income consumers are many of the so-called underbanked who are the main users of prepaid cards.
"For Wal-Mart, not only does it drive business into the store, it also extends the utility of their particular prepaid product," says Madeline K. Aufseeser, a senior analyst with Aite Group. "To the extent that Wal-Mart can create a stickier environment for the card, it's a great thing."
The government returns more than $300 billion to consumers in tax refunds each year. Capturing even a sliver of that amount is an attractive boost for Wal-Mart and other nonbanks that sell alternative financial products.
Customers having their taxes prepared at Wal-Mart will be able to choose among a variety of prepaid cards, including the retailer's own card, according to company spokeswoman Sarah Spencer. Jackson Hewitt and H&R Block both offer prepaid cards that will also be available, she adds.
Customers will also have the option of having their refunds deposited into a bank account or sent as a paper check.
Those choosing to receive their tax refund via prepaid cards will have to weigh the fees involved in using those cards. …