Wal-Mart Stores Inc. on Tuesday announced it would provide cash for customers getting a federal or state income tax refund.

Wal-Mart's Direct2Cash program allows its customers a more convenient way to get a refund than receiving a paper check, said Daniel Eckert, senior vice president of services for Wal-Mart.

The service provides convenience for customers and possible sales for the world's largest retailer. "We like to see customers with jingle in their pockets," Eckert said.

Customers choosing the Direct2Cash program have their taxes prepared at one of the 25,000 participating locations, and then receive a confirmation code from one of Wal-Mart's partners, Tax Products Group or Republic Bank, that their refund is ready. Customers can then go to a service desk or money center in a Wal-Mart to show their confirmation code, confirm their identity, and receive their refund in cash.

"It reduces the potential for checks that get lost or stolen or mishandled," said Eckert. "There are zero delays."

The new program is a boon to people who don't have traditional bank accounts, known as the "unbanked" in the financial world. That's about 8 percent of U.S. households and 3.6 percent of Minnesotans, according to the FDIC.

Consumers who want to take advantage of the program can ask a preparer if their office uses the Wal-Mart Direct2Cash software. The tax preparers will charge a fee to do the taxes, Eckert said, and there may be an additional fee for the cash pickup option of no more than $7.

In a statement, Wal-Mart said that its new service will save consumers money vs. a check-cashing provider, which typically charge 2 percent of the amount being cashed. Considering the average refund amount of $2,900, Wal-Mart's service could save a person more than $50 in fees.

Low-to-moderate income consumers in Minnesota have other choices that can potentially save them more money, said Darryl Dahlheimer of LSS Financial Counseling. He pointed to Prepare and Prosper in St. Paul, which provides free tax assistance to more than 100,000 Minnesotans.

"They not only do their taxes free, but they also do it with an eye to specific tax credits, improving their credit report and getting out of debt," Dahlheimer said.

Wal-Mart's low fees on services are a good thing, said Dave Boden, president and CEO of Hiway Federal Credit Union in St. Paul. "It's a good way to serve the unbanked," he said. "But the unbanked should have someone looking out for their best interest."

Many credit unions provide no-cost tax preparation through programs from the Minnesota Department of Revenue. Volunteers help them with tax filing, and can offer banking options. Most credit unions can set up no-fee starter accounts with a $5 deposit for the tax refund, Boden said.

Wal-Mart's new program won't be faster for the vast majority of Americans who e-file and choose direct deposit for their refunds and get them within a few days to a few weeks, Eckert said. Nearly 85 percent of returns filed last year were filed electronically, according to the IRS.

John Ewoldt • 612-673-7633