NEW YORK (AP) - Wal-Mart Stores Inc. and American Express are rolling
out a prepaid card that they say offers unique services designed to help
shoppers manage and control their everyday finances.
The two companies said Monday that Bluebird, begun
during a pilot program late last year, acts like a checking account but
without the fees that have increasingly frustrated shoppers. It will
have no minimum balance and no monthly, annual or overdraft fees. They
say the only fees that will be associated with the card will be
transparent and within the user's control, such as out of network ATM
withdrawals by consumers who don't use direct deposit.
Instead, what Bluebird will be loaded with is a
number of features, including the ability to deposit a check to one's
Bluebird account by simply taking a picture with a smart phone. It will
also offer the same fraud protections in an event the card is stolen or
lost as other standard cards.
The move comes as American Express is looking for
new ways to expand its customer base beyond its traditional wealthy
clientele. For Wal-Mart, the Bluebird service is the latest financial
product offering to be pushed by the world's largest retailer, but it's
also the most comprehensive.
Bluebird's rollout also signals how competition for pre-paid cards, once the domain of non-bank companies, is heating up.
Wal-Mart and American Express say Bluebird was
improved since the pilot test, based on feedback from consumers who said
they were bothered by rising fees related to checking accounts and
debit services.
"We are recreating and reimagining what checking
and banking services might look like in the 21st century," said Dan
Schulman, group president, Enterprise Growth at American Express in an
interview with The Associated Press. He said the partnership with
Wal-Mart, the world's largest retailer, aims to set up a "moral
equivalent of a bank branch at retail."
"Our customers tell us that they're tired of
navigating a complex maze of do's and don'ts to avoid the ever growing
list of fees found on checking products," Daniel Eckert, vice president
of financial services for Walmart U.S., said in a statement.
Deborah Weinswig, an analyst at Citi Research, said
that the offering will resonate well with Wal-Mart shoppers, as only
about 15 percent of the company's sales are paid for with a credit card.
Bluebird "could drive increased mindshare and incremental traffic over
time," Weinswig wrote in a report published Monday.
Prepaid cards are a fast-growing segment of the
payments industry. While the cards are aimed mainly at people who don't
have bank accounts or whose credit ratings are damaged, they also are
becoming popular with consumers seeking to avoid surprise bank fees and
keep from accumulating credit card balances.
But prepaid cards are typically not linked to a
checking account. Monday's announcement shows how the financial service
landscape is changing in light of the rising popularity of smart phones
and other technological advances, and evolving needs of consumers, who
want on-the-go financial services.
Wal-Mart is not new to the prepaid card segment, as
it already offers prepaid cards from Green Dot Corp. During a call with
reporters, Eckert said that Walmart has no plans to end its
relationship with Green Dot in light of its new partnership with
American Express. The discounter has a contract with the Monrovia,
Calif., company that expires in 2015. He says Wal-Mart is just
broadening its assortment of financial services to serve more customers.
Green Dot depends on Wal-Mart for more than 60
percent of its revenue. The news sent the shares of the Monrovia,
Calif.-based company plunging in Monday trading.
Bluebird cards can be used at millions of locations
where American Express cards are accepted, both in the U.S. and
internationally. Users can deposit funds onto the card via direct
deposit, with cash at any Walmart register, or by linking a checking,
savings or debit card to the account.
Another key feature: the user can set up
sub-accounts for family members or others, giving them access to certain
funds, instead of the entire account. So parents could set up such
accounts using Bluebird for their children in college.
Madeline Aufseeser, senior analyst at research firm
Aite Group, said that what makes this unique is that there are lots of
features that come with the account.
"It's just a further indication that pre-paid (cards) have gone mainstream," she said.
Wal-Mart and American Express said that more
features will be added to Bluebird in the first quarter of 2013. These
features will include more options to deposit money and check-writing
capabilities.
Bluebird will be available next week at www.bluebird.com and in more than 4,000 Walmart stores.
Shares of Bentonville, Ark.-based Wal-Mart added 13
cents to close Monday trading at $75.26. Shares of American Express,
which is based in New York, gained 22 cents to end at $58.78.
Green Dot shares dropped fell $2.618, or 20.3 percent, to close at $10.24.
