Wal-Mart Flies Away with Amex Bluebird
October 9, 2012
Patricia Hewitt
Mercator Advisory Group
Not holding a banking license is no longer an impediment to offering financial services products to the consumer market and with the announcement of the new American Express Bluebird product at Wal-Mart, traditional debit card issuers should take note. Directed squarely at Wal-Mart's core consumer, the product offers what is essentially a free checking account, which includes direct deposit, bill pay, surcharge-free ATM access, household accounts, person-to-person payments, remote deposit check capture, and mobile banking.
“The financial services landscape is changing. Technological advances, regulatory changes, and evolving consumer needs are redefining payments ranging from prepaid, to checking and debit. Bluebird is our solution to help consumers who currently may be poorly served by traditional banking products. It allows them to easily and safely move, manage, and spend their money. In an era where it is increasingly “expensive to be poor,” we have worked with Walmart to create a financial services product that rights many of the wrongs that plague the market today,” said Dan Schulman, group president, Enterprise Growth, American Express.
The product is built on the Amex Serve platform. Amex will discontinue Serve products on Dec. 8, according to Bluebird’s website. Cardholders will have the option of transferring their accounts to the new products.
Wal-Mart has offered its MoneyCard to the market for years and has been instrumental in helping to drive down the cost of these accounts in the United States. This new product will likely serve the same purpose. The difference between the Bluebird product and the original MoneyCard is feature functionality. Bluebird puts the account on par with any other digital checking account and also vaults Amex into a market it summarily avoided in with its global charge card products.
With its digital features, we would expect Bluebird to be an important component in the Merchant Customer Exchange currently under development. Target also has been quietly testing an Amex prepaid card product for the past couple of years. With these alliances and network strategies, the retailers have the opportunity to shift transactions off the global networks at both the product and network level. Discover also is working at building out their financial services strategy, most notably with their recent announcement of its PayPal alliance.
The impact of these new products is not yet apparent in the industry and these organizations have the hard work ahead in terms of building a consumer base and leveraging the assets they've created to build market value. For traditional debit card issuers, however, that depend on everyday spend to fund their retail checking account franchises, that impact might be felt sooner than later.