NEW YORK (CNN/Money) -
Discount behemoth Wal-Mart announced Tuesday that it is seeking to establish an "industrial bank" in Utah that would help eliminate third-party transaction costs that the retailer currently incurs from processing of credit, debit card and electronic check transactions in its stores.
According to the company, Wal-Mart (Research) receives more than 140 million credit, debit and electronic check payments per month and pays a small fee to process each transaction.
Jane Thompson, president of Wal-Mart Financial Services, said in a statement that Wal-Mart intends to return the savings from capturing these fees to its customers in the form of lower prices.
Wal-Mart said it has filed an application with the Utah Department of Financial Institutions and the Federal Deposit Insurance Corporation to operate the bank. If it wins approval, the bank will be located in Salt Lake City with local employees and a predominantly local board.
The U.S. Treasury Department defines an "industrial bank" as a limited service financial institution distinguished from commercial banks because industrial banks do not offer deposit (checking) accounts.
"The bank will accept limited deposits from non-profit and charitable organizations, but we have no plans to operate branch banks under this charter and it will not engage in lending of any type," Alan Whitchurch, who will serve as the bank's president, said in a statement.
Sharon Webber, a spokeswoman for Wal-Mart, declined to specify the total cost savings for Wal-Mart if the bank were to be approved. "This is the first such venture for us and I can't say for certain whether or not we will pursue more such ideas in the future."
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