Stock for prepaid debit card company Green Dot Stock plummeted more than 20 percent today, finishing at $10.36, while competitor NetSpend Holdings Inc. fell more than 7 percent to close at $9.96 per share after Wal-Mart and American Express announced their joint venture in Bluebird, a prepaid debit card with lower fees and advances electronic features.
The new card, marketed toward Wal-Mart customers, many lower-income, who either lack a checking account or have become frustrated with banks’ rising fee structures, will provide users the ability to pay bills and make deposits with their smart phones at no cost, no minimum balance and no monthly, annual or overdraft fees. Plus, if users load money onto the card at a Wal-Mart store, with a checking or savings account or payroll direct deposit, they will pay no fees.
“Our customers tell us that they’re tired of navigating a complex maze of dos and don’ts to avoid the ever growing list of fees found on checking products. Bluebird solves this problem and we believe it’s the best product on the market to help customers manage their everyday finances,” said Daniel Eckert, vice president of financial services for Wal-Mart U.S. “At Wal-Mart, we are always looking for ways to make a difference by using the strengths that come with our size, scale and reach to take on the challenges that matter most to our customers. Reducing the costs and frustration that come with high fees is one of these issues.”
The Bluebird card will offer accessibility to many low-income customers who may have previously operated on a cash-only basis, limiting some purchase options. The Bluebird card will be accepted at millions of vendors that accept American Express. Plus, users will receive perks such as American Express roadside assistance, Global Assist Services and purchase protection. Few, if any, prepaid debit card services currently offer customers similar benefits. Likewise, if a Bluebird card is lost or stolen, the customer’s money is protected by American express fraud protection.
“The financial services landscape is changing,” said Dan Schulman, American Express group president of enterprise growth. “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 Wal-Mart to create a financial services product that rights many of the wrongs that plague the market today.”
According to the fee structure released by Wal-Mart Media Relations, Bluebird will only charge a cardholder a fee in two scenarios: A $2 fee will be charged if money is added to the account from a debit card; or $2 per ATM usage if the member does not have direct deposit on the account—the $2 will be waived at Moneypass Network ATMs if the member adds direct deposit. Out-of-network ATM-usage will always incur a $2 fee.
Bluebird plans additional benefits to be available by early 2013. The company will be offering additional deposit options and check-writing capability.
Customers can open a Bluebird card account as soon as next week on Bluebird.com or purchase a kit at Wal-Mart for $5, which includes a card that can be loaded with between $1 and $500 immediately at the Wal-Mart register. The card can be used immediately at any U.S. merchant that accepts American Express. Once the account set-up is completed at bluebird.com, customers will have access to all Bluebird features.
The new card doesn’t necessarily mean the end for competitor prepaid card companies, however, analysts told Bloomberg. In fact, they said it may drive the competitors to lower their fees, which have been called into question recently by the Consumer Financial Protection Bureau. Plus, Green Dot, which sells 60 percent of its cards at Wal-Mart under a company contract that currently runs to 2015, may attract a different clientele than Bluebird. The cards sell in the store for $3 compared to the $5 Bluebird kit. For a customer looking to load a fixed amount of cash, the price difference could play a factor. Netspend cards are not sold at Wal-Mart and will likely be less affected by the Bluebird option.
