Retail giant Wal-Mart Canada Corp. is rapidly expanding its reach into the Canadian market by recently inking a deal with U.S.-based Western Union Co. The deal allows Wal-Mart shoppers in-store access to selected financial services.

The arrangement with Western Union, signed earlier this fall, allows Wal-Mart’s Canadian customers access to convenient global money-transfer services at a reduced price as well as the ability to make quick payments on bills, mortgages and loans.

The services were originally launched in five Wal-Mart stores in Toronto in October, but have already expanded to all Wal-Mart stores in Ontario and are expected to be in place across Wal-Mart’s 300-store Canadian network by early 2008.

Wal-Mart will continue to add more financial services in the future, positioning the chain as an even more formidable competitor to other Canadian retailers. However, for Canada’s big chartered banks, Wal-Mart will probably be nothing more than an annoying intruder cutting a bit of their grass.

“We serve one million Canadians a day in Wal-Mart stores across Canada,” says Andrew Pelletier, vice president of corporate affairs with Wal-Mart. “Our prediction is that these new financial services will be popular. They are part of a broader initiative to provide more conveniences as part of the one-stop shopping experience.”

Pelletier expects the most popular service will be the ability to transfer money globally through Western Union money transfers. Customers will be able to transfer money to 200 countries in which Western Union has offices.

“Canada has a rapidly growing immigrant population and is one of the most culturally diverse countries in the world, particularly in the urban markets,” says Pelletier. “Many of Wal-Mart’s customers are sending money to friends and family in other countries.”

CHEAPER RATES

The most popular destinations for money transfers are Jamaica, India, the Philippines and China. Pelletier says the costs of transferring funds through a Wal-Mart location are lower than Western Union’s posted rates at its locations outside of the Wal-Mart network. For example, to send $300 to Jamaica from a Wal-Mart-based Western Union would cost $10, compared with $17 in regular Western Union locations. To send $300 to the Philippines would cost $12 through a Wal-Mart location, compared with $14 at other Western Union offices.

“The world has become so global and people so mobile that there is growing demand for money transfers around the world,” Pelletier says. “Our goal is to provide the service at the lowest price.”

The other prong of the deal is the Western Union Quick Collect service that enables Wal-Mart customers to forward payments for their mortgages, car and consumer loans, credit card debts and other bills using either cash or a debit card at Wal-Mart stores. The service costs $15 a transaction, no matter how large the amount.

“The service is great for emergency payments,” Pelletier says. “It’s a great convenience if a customer is late with a bill and needs to pay it quickly to avoid a problem such as having the heat cut off. It’s a fast way to pay a bill and it comes in handy when you’re in a bind.”

Wal-Mart’s plans to introduce other products to meet customer needs in the financial services arena could involve other providers besides Western Union, Pelletier says. However, he wasn’t able to say whether Wal-Mart would be entering such areas as deposit-taking or the granting of loans and mortgages.

Retailer Loblaw Cos. Ltd. is already offering a wide array of financial services through President’s Choice Financial — including savings accounts, GICs, lines of credit, mutual funds, RRSPs and insurance — in partnership with CIBC and a few insurance companies.

“Customers are time-pressed and looking to obtain as many services as possible at one stop,” Pelletier says. “We are allowing them to access a growing array of services in a convenient and low-cost manner in a retail environment at which they are already regularly shopping.” IE