By Andrew R. Johnson
American Express Co. (AXP) and Wal-Mart Stores Inc. (WMT) said
Monday they are selling a new prepaid card in the retailer's stores
and online they say is cheaper than traditional debit cards and
checking accounts in a bid to capture new revenue.
The companies first began testing the card, called Bluebird,
late last year, and have since fine-tuned the product based on
customer feedback.
"Bluebird is our solution to help consumers who currently may be
poorly served by traditional banking products," Dan Schulman,
president of American Express' enterprise growth group, said in a
statement. "It allows them to easily and safely move, manage, and
spend their money."
Prepaid cards function like traditional debit cards and can be
used to make purchases at brick-and-mortar merchants and online
retailers. However, they do not come with a checking account, and
in some cases lack some of the regulatory protections afforded to
users of checking and debit cards.
Traditionally sold by alternative financial-services companies
such as Green Dot Corp. (GDOT), NetSpend Holdings Inc. (NTSP) and
Western Union Co. (WU), the market has recently attracted a slew of
mainstream lenders, including American Express, J.P. Morgan Chase
& Co. (JPM), U.S. Bancorp (USB) and Regions Financial Corp.
(RF), as they look for additional revenue sources amid fee limits
on other products.
American Express and Wal-Mart said their product contains the
same fraud protections and product features as other traditional
card products, and carries significantly lower fees than competing
prepaid offerings. For example, the Bluebird card does not have a
monthly maintenance fee, annual fee or activation fee, while other
prepaid cards can carry fees of $5 or more per month, in addition
to activation fees and charges for talking to a customer-service
representative, checking balances at automated teller machines and
other activities.
"Our customers tell us that they're tired of navigating a
complex maze of dos and don'ts to avoid the ever growing list of
fees found on checking products," Daniel Eckert, vice president of
financial services for Wal-Mart U.S., said in a statement.
Bluebird, which American Express first disclosed in March, is
the latest effort by both companies to attract new customers.
American Express, traditionally a lender of credit cards to
affluent borrowers, last year launched a new prepaid card as part
of an aggressive push to appeal to a wider swath of consumers. It
has since struck deals to sell its new products in stores like
Office Depot (ODP), Target Corp. (TGT) and other stores.
Wal-Mart has long been a major player in alternative financial
services. It already offers its own prepaid card in stores and
online called the MoneyCard, which is managed by Green Dot, a
third-party vendor that also offers prepaid cards in stores and
supermarkets under its own name.
Green Dot's shares have been under pressure this year as it has
faced more competition from traditional lenders encroaching on its
market. Its shares were down 21% at $10.15 in early trading Monday
after American Express and Wal-Mart made their announcement.
American Express' shares were up 0.8% at $59 and Wal-Mart's
shares were down 0.2% at $75 in early trading.
Write to Andrew R. Johnson at andrew.r.johnson@dowjones.com
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