(Reuters) - Wal-Mart Stores Inc (>> Wal-Mart Stores, Inc.) has launched a service allowing customers to pick up tax refunds in cash at stores across the United States.

The service, Walmart Direct2Cash, was made available at Wal-Mart stores from Tuesday, the company said.

The world's largest retailer is working with Tax Products Group (TPG), a unit of Green Dot Corp (>> Green Dot Corporation), and Republic Bank & Trust Co. Wal-Mart will not charge a fee for the service, although customers could be charged up to $7.

Sterne Agee analyst Thomas McCrohan said the service would appeal most to customers without a bank account, who would otherwise pay a higher fee to convert a tax-refund check into cash.

" ... Those without a bank account would likely view this option as more economically attractive," he wrote in a note.

In April, Wal-Mart launched a money transfer service in a direct challenge to the dominance of Western Union Co (>> The Western Union Company) and MoneyGram (>> Moneygram International Inc), aiming to broaden the financial services it offers to low-income customers.

Wal-Mart's shares closed down marginally at $86.69 on Tuesday. Green Dot's stock closed up 2.6 percent on the New York Stock Exchange.

(Reporting by Shailaja Sharma in Bengaluru; Editing by Robin Paxton)