The world’s biggest retailer Walmart Stores Inc. is offering customers a new prepaid debit card, called Bluebird, in partnership with American Express Co.
The new card will be available in 4,000 Walmart stores across the US and online this month. The card lets customers pay for purchases anywhere American Express cards are accepted and use it to withdraw money from automatic teller machines.
Walmart stores nationwide already offer bill payment, check cashing and wire transfers. The retailer has been adding financial services over the past two years in an effort to increase traffic to its stores.
Adding a prepaid debit card gives it an edge over competitors like Family Dollar Stores Inc. and Dollar General Corp; both chains have seen their customer bases increase since the recession, but do not offer financial services.
Walmart appeals to low-income customers, a new target for American Express, which normally services affluent customers. The partnership will allow the credit card giant to reach customers not served through traditional credit services.
The financial terms of the partnership have not been disclosed.
Walmart also offers a prepaid debit card through Green Dot Corp., and will continue that partnership. Walmart has tried numerous times, most recently in 2007, to get a bank charter but has faced opposition from financial institutions and the US government.
Popularity Of Prepaid Cards
According to Mercator Advisory Group, the market for prepaid debit cards will grow to $150 billion in 2012. Prepaid debit cards became popular in the US after banks raised their fees in response to a government-imposed cap on the number of debit card transactions or “swipe” fees that could be charged to merchants.
The average bank customer pays $259 yearly in checking account fees, according to monetary management system Bretton Woods.
Prepaid debit cards are an option for those households not served by the traditional banking system.
Consumer advocate groups, however, say prepaid debit cards often prey on the financially vulnerable and are not covered by the same consumer protection laws that protect credit or debit cards.
Key Statistics - Banking Industry in The US (source: Business Monitor International)
- In 2011, the banking industry in the United States had assets totaling nearly $13 trillion. For the timeframe 2007-2011, this represents a compound annual growth rate (CAGR) of close to 4%.
- In 2011, the industry's most lucrative segment was bank credit, which had assets totaling $9 trillion – or nearly 74% of overall industry value.
- Over 2011-2016, the banking industry in the United States is predicted to grow at a CAGR of nearly 7%. By the end of 2016, the industry is expected to be valued at $17.5 trillion.