Thanks to a partnership between PayPal and Walmart, unbanked families will now have a better place to stash their cash as we head into the holiday season.
Paypal announced today that by early November, Walmart customers with PayPal accounts would be able to deposit and withdraw money from their PayPal balance at any of the chain's 4,761 locations nationwide.
The service is available to all PayPal account holders, but if you carry a PayPal Cash Mastercard, you'll also be able to add or withdraw from your balance at Walmart ATMs or at one of the retailer's help desks.
The service isn't free
However you access your cash, the service will cost $3 per transaction. While paying a fee to access your own money is an annoyance, the fee is comparable to the average ATM fee most banks' charge if you use an ATM outside of your bank's network.
It's important to note that this step is necessary if you want to use your PayPal balance to make a purchase at Walmart. You can't simply pay for Walmart purchases directly through the PayPal app.
Who does this help?
One in four households falls into the category of being unbanked or underbanked, according to the FDIC. In many cases, these families don't hold a bank account because they lack the financial resources to warrant opening one in the first place. Other families simply lack an understanding of how the banking system works.
That means approximately 9 million families in the U.S. use no traditional banking service, and another 24.5 million households rely heavily on financial services outside of the traditional banking system, such as predatory payday loans, even though they do have a savings or checking account.
Unbanked households also face another challenge: because their income can vary significantly from month to month, building an emergency savings fund is difficult. But for those who do manage to save money for the proverbial rainy day, they currently store this cash in their house or at the home of a friend or family member, putting it at risk for theft or loss.
Online banking is still better—and it's on the rise
While keeping your money in a PayPal account is a much better option than under your mattress, opening an account at an online bank is better. It provides the same FDIC insurance and easy, mobile access as a PayPal account, but money stored in an online bank account has the opportunity to generate interest, and it can help you build your credit.
The good news: the use of online banking is on the rise. The FDIC found a substantial increase in online and mobile banking between 2013 and 2015, with more than one-third of households reporting online banking as their primary method for accessing a bank account.