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AMEX Moves to Be More Competitive in Prepaid

By Mercator Advisory Group
March 22, 2012
in Analysts Coverage
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American Express Co. is selling its prepaid cards through Office Depot and adding features to make its prepaid cards more competitive. The company is offering prepaid cardholders a chance to get a traditional charge card once they have established a history with their prepaid card.

Regardless of the specifics, the move clearly delineates Amex’s prepaid card from its competitors since credit bureaus currently do not accept information on prepaid products as no line of credit has been extended. Amex is in a unique position because it can use its prepaid cardholders’ spending record to approve them for a charge card in lieu of an actual credit report. These charge cards, which differ from a traditional credit card in that cardholders cannot carry a balance, will then help customers establish a credit history.

If its marketing and sales efforts are successful, then American Express will become a fierce competitor in the prepaid market. Its broad view of the potential prepaid audience, its ability to offer charge cards and credit cards, and its status as a three-party system that exempts it from many provisions of the Durbin Amendment could give it an edge over other players.

Click here to read more from MainStreet.com.

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