My Take: Walmart’s Pay With Cash

Walmart recently announced a new capability on its website to allow customers shopping online to Pay With Cash. The way it works is:

“During checkout, shoppers select the “cash” option and their shipping preference. They immediately receive an order number on the confirmation page and an email receipt. Shoppers have 48 hours to take the printed order form to a checkout lane at any Walmart store or Neighborhood Market. Once the cash payment is completed, the customer’s order is shipped to the store or to a preferred address.” (The Salt Lake Tribune)

According to a Walmart executive:

“Many of our customers are looking for more ways to purchase items online but don’t have a credit, debit or prepaid card.”

The article goes on to say:

“One in four U.S. households fall into the unbanked and underbanked categories, where they don’t have a bank account or credit card or have limited banking options, and often rely on cash as a form of payment for purchases, according to the FDIC.”

My take: PWC = PFG (Pure ‘effin Genius). The rationale from the Walmart exec — supported by the FDIC statistics — is misguided, however.

There is a lot of confusion regarding the terms unbanked and underbanked. Per the FDIC’s definitions, the unbanked are consumers without a checking or savings account, and the underbanked are consumers who have a checking and/or savings account, but use “alternative” financial products like prepaid cards, check cashing services, or payday loans.

Also per the FDIC, only about 7% of US households fall into the unbanked category. So when the article cited above says that “one in four U.S. households fall into the unbanked and underbanked categories” keep in mind that the vast majority are in the latter, not the former, category.

With no intention on calling the Walmart exec quoted in the article a liar, it really isn’t true that “many” Walmart customers don’t have a credit, debit, or prepaid card.

So why is PWC PFG? It gets people into the store, having already committed to purchasing something.

If you were a Walmart customer using PWC, wouldn’t you look for that product in the store when you went in? You wouldn’t? What kind of moron are you?

Of course you would. Why would you wait for Walmart to ship the product to you (or to the store, requiring another trip) when you could pick it up right then and there?

Walmart’s PWC option has little to do with serving un- or underbanked consumers, and even less to do with cash. It’s about driving store traffic and driving sales.

I don’t expect that the PWC option will be widely used on Walmart’s site, but it doesn’t have to be widely used for the tactic to be successful. Any use of the PWC button that results in store traffic and sales is smart marketing.

Nice work, Walmart.

[For more details on Walmart's PWC option, see the NetBanker article Feature Friday: Paying Online with Cash]