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BENTONVILLE, Ark. -- An ATM sits in the front of a Wal-Mart store in Kearny, N.J. There, customers can withdraw cash with no fees, process gift cards and pay Wal-Mart bills. The machine, displaying a green "Wal-Mart Money Center" logo, along with many just like it across the nation, are making other financial institutions nervous, according to a Bloomberg report.

Wal-Mart Stores Inc. applied for an application in July 2005 to open a Utah-charted bank in its store to lower processing costs of debit and credit transactions. When the company applied for the charter in Utah, it claimed that it would not look to open its own branches. However, Wal-Mart currently leases space to 1,100 branches in 3,230 of its U.S. stores, according to a Bloomberg report.

Opponents of Wal-Mart's ATMs and bank services believe that it will hurt the small town bankers in the areas it serves. Brad Williams, president of the Security Bank of the Ozarks, told Bloomberg "Wal-Mart has really hurt the small-town businesses and they will do the same thing with banking."

Even though Wal-Mart expressed a disinterest in banking, a test ATM set up in Kearney, N.J. "undercuts their argument that they're not interested in banking," said Representative Barney Frank of Massachusetts, in an interview with Bloomberg. "It shows that they have ambitions far beyond just processing their own paper."

Tara Raddohl, spokeswoman for Wal-Mart, said that the bank charters lower costs and makes services such as gift cards more convenient. She declined to comment on the number of cash machines, like the one in Kearny, N.J., that are in place in the pilot program.

As a result, a bill has been introduced that will bar non-financial companies from operating banks. A provision of the bill states that those companies that have received a charter after June 1 must divest the banks within two years, unless 85 percent of the revenue comes from financial services.

The bill also prohibits new services from non-financial companies that already operate banks, such as discount chain Target.

Wal-Mart's application for U.S. deposit insurance generated a record 4,000 letters to the Federal Deposit Insurance Corp. (FDIC), and as a result, the FDIC held public-hearings on bank insurance applications.