Wal-Mart Opens a Foreign Bank Account

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If at first you don't succeed, try, try ... in Canada.

It has been nearly 18 months since Wal-Mart (NYSE: WMT) gave up on its dream of owning its own bank. Er, its dream of opening a bank in the U.S., that is.

Back in April 2006, we discussed Wal-Mart's bid to capitalize on the success of its store-within-a-store partnerships with financial services firms like MoneyGram (NYSE: MGI) and SunTrust (NYSE: STI) by setting up a bank of its very own.

According to management, Wal-Mart's primary motivator in this effort was to reduce the cost of allowing customers to buy on credit with the use of Discover, MasterCard (NYSE: MA), and Visa (NYSE: V) -branded charge cards. Every time a customer uses one of these little bits o' plastic, you see, Wal-Mart pays a small fee to the bank that processes the payment. And the way Wal-Mart sees it, why give this money to Bank of America or JPMorgan Chase, when Wal-Mart might just as easily handle the processing itself through a wholly owned "pocket bank"?

Of course, determined opposition from the American Bankers Association (ABA) and its constituent members -- everyone from larger banks like BB&T down to the First National Community Bank of Palookaville -- scuttled Wal-Mart's effort to break into banking in the U.S. The bankers didn't like the idea of losing their processing fees. They liked even less the prospect that once Wal-Mart got a taste for banking, it might decide to expand its operations from card processing into deposits, consumer lending, mortgages, and so on. Long story short, the bankers won, Wal-Mart lost, end of ...

Not so fast
This story isn't over yet. Turns out, Wal-Mart just turned the page on the U.S. and shifted its gaze south (to Mexico) and now north as well. Over the weekend, media reports began filtering south about Wal-Mart filing an application with Canada's Office of the Superintendent of Financial Institutions, seeking permission to open a pocket bank for its Canadian subsidiary.

Down south, Wal-Mart already has 38 branches set up near its stores, and plans to stick 10 times that number of "banking booths" within its Mexican stores. Up north, details on the retailing giant's ultimate plans remain sketchy, but one can presume the retailer will want to follow a path similar to what has worked in Mexico.

And as for Wal-Mart's grand plan of world domination, including its presumed desire to enter the U.S. market from its new foreign bases? Management is keeping mum there as well. But I think I know what it's thinking.

Read all about Wal-Mart's interest in the banking biz in:

• Can You Bank on Wal-Mart?
• Wal-Mart Savings & Loan & HMO
• Wal-Mart: The Retail Pariah