(Corrects spelling of Daruvala, paragraph 11)
* Bluebird card available next week at Walmart stores,
* Amex gets access to 4,000 stores, spending by under-banked
* Wal-Mart brings low-pricing to card accounts
* Average American pays $200 annually in fees
* Shares of rival card companies NetSpend, Green Dot tank
By Martinne Geller and David Henry
NEW YORK, Oct 8 Wal-Mart Stores Inc and
American Express Co are teaming up to offer a prepaid
debit card called Bluebird to target lower-income shoppers who
may not have bank accounts.
The move will give American Express, best known for its more
affluent cardholders, a 4,000-store gateway to tens of millions
of so-called "underbanked" households and the fees they will
generate as technology moves more of their transactions from
cash to digital payments.
At the same time, Walmart will get to extend its mantra of
"every day low prices" to yet another sphere and come closer to
achieving its years-long goal of offering banking services.
"Walmart is doing everything it can to be a financial
services provider to the largest number of Americans possible,"
said David Robertson, publisher of The Nilson Report, which
tracks the payments industry.
The Bluebird, which will be available next week, offers
something similar to a checking account, but without minimum
balance requirements or monthly or annual fees. Adding money is
free, unlike other cards, known as prepaid debit cards or
reloadable cards. Bluebird cards will be accepted anywhere that
accepts American Express cards, not just at Walmart.
"This is incredibly cheap. This is one of the best, if not
the best, options for prepaid cards, said Anisha Sekar, vice
president for credit and debit products at NerdWallet.com, which
compares prices for financial products.
The average American pays about $200 a year in ATM fees,
overdraft fees and other bank fees, said Daniel Eckert,
Walmart's vice president of financial services.
The elimination of those fees should free up more money to
The announcement sent shockwaves through parts of the
rapidly changing payments industry. Shares of Green Dot Corp,
which currently sells more expensive prepaid cards
through Walmart, dropped 20 percent, and NetSpend Holdings,
another provider of prepaid debit cards fell 3 percent,
as bigger, more powerful companies move in on their business.
Bluebird also brings a new threat to the relationships banks
have with their customers. If the deal with Walmart works for
American Express, the financial services company could take
market share from other banks.
"This is one salvo," said Toos Daruvala, a consultant in
McKinsey & Co.'s North America banking and securities practice.
"All banks need to try to figure out who is friend, who is foe,
who they are going to partner with and who they are going to
compete against in the world of retailers, telecoms and
CASHIERS AS BANK TELLERS
Bluebird accounts will accept payroll direct deposits and
smartphone deposits of photographed checks. They will also allow
holders to make mobile payments and person-to-person transfers.
"We reimagined how banking might be done in the 21st
century," said Dan Schulman, American Express's group president
of Enterprise Growth. "Where every Walmart cash register is the
equivalent of a (bank) teller."
Prepaid cards have been the subject of near-universal scorn
by consumer advocates for their often high and complicated fees
until the past year when large banks, such as JPMorgan Chase &
Co began marketing simple and low-cost versions, partly
to cut their own costs of dealing with people with less money.
Walmart's efforts to get into the banking business have
spanned more than a decade. The Bentonville, Arkansas-based
retailer has applied for bank charters several times, but has
failed amid opposition from banks, unions and others.
Prepaid card accounts are not subject to as many government
regulations as traditional bank checking accounts, researchers
at the Pew Charitable Trusts said last month. [ID:nL2E8K56AJ}
The U.S. Consumer Financial Protection Bureau is looking to
impose restrictions. Of particular concern is fees for
The Bluebird accounts do not currently run that risk because
they do not allow holders to spend more money than they have on
the cards. Schulman declined to say how the company will handle
the issue once it allows customers to write checks on the
account, expected next year.
ALL THE WAY TO THE BANK
Wal-Mart, the world's largest retailer, has long tried to
serve its lower-income shoppers who have little or no access to
credit. It has offered various financial services to shoppers
for more than a decade, including check-cashing, domestic and
international money transmission, walk-in bill payment, gift
cards, and general prepaid card services.
SW Retail Advisors founder Stacey Widlitz noted that dollar
stores - which include Family Dollar and Dollar Tree
- have been trying to wrestle market share from Walmart
by adding more groceries and payment types.
"But Walmart isn't lying down and taking it quietly,"
Widlitz said. "The Amex card is another way to appeal to the
Bluebird will be available next week online and in more than
4,000 Walmart stores in the United States.
Cash withdrawals from the 22,000 ATMs in the MoneyPass
network carry no fees or surcharges for customers enrolled in
direct deposit. For those without direct deposit, withdrawals
are $2. For out-of-network ATMs, each withdrawal is $2 and
additional operator fees may apply.
Walmart and American Express declined to reveal the terms of
their agreement, or detail exactly how they will make money from
it, beyond offering value-added services.
Exact customer terms for the new accounts will be posted
next week when the new cards become available, an American
Express spokeswoman said.
Green Dot shares plunged $2.60 to close at $10.25 on the New
York Stock Exchange, while NetSpend ended the day down 79 cents
to $9.96 on the Nasdaq. Wal-Mart's shares closed up 12 cents and
American Express closed up 26 cents.
(Additional reporting by Jed Horowitz; Editing by Maureen
Bavdek and Leslie Gevirtz)