Although Wal-Mart Stores Inc. (NYSE: WMT) gave up the fight to run an internal banking operation that would have saved the company millions in transaction and other costs, the retailer's true intentions may yet be coming through after all. The company's recent Visa debit card announcement makes me think that Wal-Mart, darn it, will get in the banking business for consumers some how, some way. It just won't be an FDIC-insured banking institution.

Does Wal-Mart want to take a piece of the $36 billion first-quarter profit that the banking industry saw (fourth highest total ever)? Why would it not? The finance industry is so incredibly profitable that any retailer with the scale of Wal-Mart (huge, but with margins that aren't that huge) would be dumb not to look at new ways to generate profit growth. Who better than the world's largest retailer where customers come to in drives 24 hours a day?

Well, that notion doesn't sit right with the U.S. banking industry (nor should it), which fears the "commoditization of banking" if Wal-Mart enters the personal banking domain. What else is new? Wal-Mart has moved into many industries to toss out competition in price, only to find that "what goes around comes around" as customers now are increasingly seeking nicer alternatives with more value-added than what Wal-Mart can provide. Should the banking industry be worried? As long as the banking industry continues to innovate, Wal-Mart will prove to be little threat. Well, at least initially.

As Wal-Mart Stores, Inc. (NYSE: WMT) sales slow down and competitors take some of its business away, the largest retailer tries to not only to reinvigorate sales at its U.S. locations but is also looking at other ways to make money. In that vein, the retailer tried to enter into the banking business last year as processing customer transactions internally would have saved millions of dollars in costs it has to pay to outside parties now.

Those efforts were shelved after some feared that Wal-Mart would enter the retail banking business and use its might to offer banking services to customers. In a way, this "captive audience" approach frightened many (including many banks), so Wal-Mart withdrew its FDIC application and let the movement die. Is the company trying to get into the business of financial services but without offering any actual banking services? It certainly looks that way.

The resultant secondary effort from that movement is now in play, as Wal-Mart wants to offer a prepaid shopping card to customers that can be used in stores or on its website. The card will be issued by Visa and will not require a checking account. What Wal-Mart wants to do here is get as close to taking customer money as "deposits" as possible, but without being a bank. The card will have a limit of $3,000 and could be used at ATMs, other stores and on internet purchases, at Wal-Mart or other stores.

It appears that Wal-Mart Stores, Inc. (NYSE: WMT) has dropped its planned foray into the banking business as of late last Friday. The world's largest retailer has abandoned its bid to establish a banking business after quite a firestorm of controversy over that move.

Some groups and individuals lashed out at Wal-Mart for trying to enter the banking business (and establishing a power beachhead in that area), although Wal-Mart's application to the FDIC was to use banking operations internal to the company, not external to the customer. Wal-Mart wanted to process all those electronic transactions itself instead of outsourcing it, which would have saved the company hundreds of millions based on the volume of transactions it handles.

But Wal-Mart withdrew its application for a bank charter from the FDIC (Federal Deposit Insurance Corporation) on Friday. Instead, Wal-Mart has apparently signed leases with banks that operate branches in hundreds of its stores that will reserve Wal-Mart's right to offer an array of future financial services in its stores. According to the lease terms, Wal-Mart can offer future services including mortgages, consumer loans, home equity loans, investment and insurance products and any other type of service or product that the company might develop.

So when it came down to it, the possible "cover" of using an internal banking institution to process transactions may indeed have been just an entry point to start offering banking services to customers, since that is what Wal-Mart is doing with its banking lease partners as far as the information I've seen so far. Was Wal-Mart's "internal banking plan" just a smokescreen from the start? Your call.

When Wal-Mart Stores, Inc. (NYSE:WMT) wanted to enter the banking business in the U.S. -- even indirectly-- consumer groups and watchdogs came out to protest the nation's largest retailer from offering banking services inside its stores.

Wal-Mart's real plan from the start was to own its own commercial banking branch to reduce or eliminate its reliance on outside financial processing institutions. But, who knows if the retailer *wanted* to enter the direct, retail banking business. My guess is yes -- just not now.

The reaction in Mexico to Wal-Mart's banking services plan has been just the opposite. Wal-Mart is also the largest retailer in Mexico (and the world) and it wants to reach out to working-class Mexican citizens that larger, global banks like HSBC and Citigroup have avoided like the plague -- and the Mexican government is cheering them on. These folks may not have large sums of investable and backable legal tenders,but they have cash and there's always a need to "take that to the bank."

Former fed chairman Alan Greenspan went as far as publicly worrying about regulators' lack of oversight Wal-Mart. In fact, many legislators in the U.S. congress echoed Greenspan's concerns when Wal-Mart announced that it would want to own is own commercial banking institution. Is there is lesson for fearful U.S. regulators to latch onto here? What are your thoughts?