Wal-Mart has maintained the service is vital since “lower- and middle-income workers have difficulty meeting requirements for traditional bank accounts and are underserved in the financial sector.”

In its ruling coming after months of deliberation on the application submitted in October 2005, the Division said taking into account objections by the Massachusetts Bankers Association, CUs and payday firms, Wal-Mart had met basic requirements for demonstrating the check cashing operations would provide a needed public service.

“The Division does find that the commercial location of Wal-Mart stores, in conjunction with the hours of operation as well as the very competitive fee structure for its check-cashing services, do provide an argument that a public need will be met,” said the approval order.

Fishlock, one of two CU CEOs that testified at a Springfield hearing, said Wal-Mart's claim to be serving the unbanked through check cashing “undermines our cooperative effort” in this area.

“Those individuals who can least afford to pay for the right to cash their pay checks now have these additional locations that they will be charged,” said Fishlock.

“Our approach going forward will be to emphasize consumer education and the right of the underserved and unbanked to cash their hard earned pay check at a credit union without incurring a fee,” he said. Supporting Fishlock was Valleystone Credit Union of Wilbraham, which last summer said it would be closing its own Wal-Mart branch in Chicopee. The CU said the facility would be shut Nov. 21, maintaining Wal-Mart demands to relocate the branch to larger space would be uneconomical and that check cashing was just more evidence of the retailer's competitive power. In offering the service, Wal-Mart said it would deduct a 1% fee from a check's face value, with a maximum charge of $3.00. Wal-Mart said it would cash only payroll, government, insurance, money orders and preprinted checks. It will not cash personal checks.

The Massachusetts Bankers Association, in opposing the service, charged the Bentonville, Ark. retailer would use check-cashing facilities to lure customers into “impulse purchases” and also discourage them from opening savings accounts.

Moreover the bankers complained check cashing was a first step toward wider expansion of financial services in company stores. Wal-Mart already operates check-cashing services in 45 other states, according to the division order.

The Division said it endorses the efforts of bankers and CUs to bring unbanked consumers “into the mainstream financial system”, but still “a check-casher remains the option of choice by numerous consumers.” It did note that Wal-Mart's presentation on offering checking in 45 other states to help the unbanked was compelling, but yet its fee arguments were “thin.”

In approving the application, the Division said it “believes the establishment of such mainstream banking relationships is vital for unbanked consumers to improve their economic status. Through such a relationship, savings is promoted and a record is established that may lead to an extension of credit.”

In its order, the division also took into account vigorous objections of check cashers countering their anti-competitive claims against Wal-Mart.

“The underlying purpose of the Check Cashing law is to protect users of check cashing establishments and protect local communities,” said the opinion written by Commissioner Steven L. Antonakes. “The statute is not intended to protect other financial institutions against competition.”

The opinion said it “supports competition among banking institutions by permitting banking offices to be established in close proximity to one another. This policy promotes public choice and competitive pricing in banking and credit products. This policy can also be applicable to the licensing of check cashers.”

“In the absence of public safety and zoning issues, the Division concludes that competition with respect to fees, hours, and service can benefit customers who use check cashing facilities.” –[email protected]