THE BLOG
03/28/2013 06:30 pm ET Updated May 28, 2013

WalMart Is Finally (Sort Of) a Bank

Since 2005, WalMart has been trying to leverage their scale (over 4,000 stores) into the banking business. Nearly six years ago I wrote a HuffPost column about their failed attempt to get an Industrial Loan Company charter (essentially a corporate bank license) from the FDIC. WalMart withdrew their application after a political hue and cry.

WalMart came back later that year with the WalMart Money Card, which was a prepaid Visa card, which in some ways acted as a de facto checking account. The Money Card never really caught fire, due in large part to the fees associated with it.

Jump six years ahead to this week, when WalMart announced that its Bluebird card, a prepaid American Express card similar to the Money Card, will carry FDIC insurance, and you can load up to $100,000 per year onto it. You can also write checks with it. And it is essentially fee-free.

WalMart really did, this time, finally get its bank. But will it work for them as a business? Should they be in the banking business at all?

If you look at Walmart in a certain way, you realize they essentially make nothing at all. They just distribute things. Lots of things. Actually about 160,000 different things per store in over 4,000 stores. WalMart's only edge in this is their ability to eliminate waste throughout the supply chain. That's really all they do. Eliminate waste.

Apple designs amazing products. WalMart eliminates waste.

One might argue that this is a brutal form of capitalism for an enterprise, but this is their edge. And when this edge is applied across 4,000 stores and 150 million shoppers per week, you have your reason for the wealth of the Walton family.

I believe what WalMart is doing with the Bluebird card, after several fits and start, is finally successfully applying this edge to banking, specifically, this form of hybrid checking account wrapped in a prepaid card.

575,000 people already have Bluebird cards, and nearly $300 million is currently loaded onto them. In terms of people, that's huge. In terms of assets, that's small.

But what WalMart can do is scale quickly into a business once it gets the hang of it. In 1990 WalMart sold no groceries. Now they lead that market. WalMart decided to go into consumer electronics full force four years ago. Have you shopped in a Circuit City lately? When WalMart scales properly, they can dominate.

But should they be in banking at all? Aren't they the Devil incarnate?

WalMart has been accused of many things, including that whole Satan thing, but no one has ever accused them of not knowing how to run a business, or being dumb about money. Which can't be said about Bank of America, which received a $45 billion bailout. Or Wells Fargo, $25 billion. Or Citigroup, $45 billion. Or JP Morgan Chase, $25 billion. You get my point.

The banking business is overdue for a model which eliminates waste, and in which the risk of the big banks is not socialized. $606 billion dollars was disbursed to financial institutions during the bailout. $606 billion is over twice WalMart's market value. WalMart did not take a nickel.

I know how readers of HuffPost feel about WalMart. Y'all won't be picking out china together anytime soon. But maybe it's time to consider letting a company that actually knows how to run a business into the banking business.