American Express, Walmart Team Up on Low-Fee Prepaid Card
Walmart and American Express are joining together to enter the booming prepaid card market with a low-fee card aimed at consumers who are disillusioned or excluded by the rising costs of banking services. The card named Bluebird will be positioned as an alternative to debit and checking accounts.
The card will have no monthly, annual, activation or overdraft fees and will not require a minimum balance. The companies said Bluebird has the same fraud protections as other traditional card products. Money can be placed onto the card at no charge with cash at any Walmart register, through direct deposit, by remote check capture with a mobile application or by linking to a bank account.
Cash withdrawals can be made at no charge from any MoneyPass ATM machines if the cardholder is part of a direct deposit program. If not, withdrawals are $2. Withdrawals at out-of-network ATMs are also $2. It would cost cardholders $2 to add money from a debit card.
Bluebird has been in test market since March but will be available online next week and in the 4,000 Walmart stores.
“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.
Prepaid cards were once the black sheep of the card family, charging high interest rates and fees to consumers with low credit scores who found it difficult to qualify for a standard credit card. Changes in the credit card industry have slashed a number of revenue sources for issuers, and prepaid cards–not covered by these recent regulations–have become a possible source of much-needed revenue. Today, competition for the prepaid market is growing, and driving down rates and fees.
Consumers loaded approximately $57 billion onto prepaid cards in 2011, and loads are projected to reach approximately $82 billion in 2012, $117 billion in 2013, and $167 billion in 2014, according to the Mercator Advisory Group.
Currently, there are no government regulations and consumer protections on prepaid cards–debit and credit card rules and regulations do not apply. But that may soon change. The Consumer Financial Protection Bureau is investigating the fees and practices of prepaid cards and seeking input on ways to enforce safety for consumers.