American Express Co., which is trying to expand beyond the affluent customers it normally lends to, is testing the sale of prepaid cards in some Wal-Mart stores.
The New York-based lender is marketing the reloadable cards, which can be used wherever American Express is accepted, under the name "bluebird" in about 180 of the discount retailer's stores on the West Coast, Laura Kelly, an executive helping spearhead the company's push into prepaid cards, said in an interview Monday. Wal-Mart operates more than 4,400 stores in the U.S., including its Sam's Club warehouses.
Customers can also sign up for the card online.
Kelly declined to discuss specific details about the program or whether it will be expanded into additional stores, but said it is part of Amex's strategy to appeal to a broader swath of consumers.
A spokeswoman for Wal-Mart Stores Inc. confirmed the trial Monday and said "depending on our customers' reaction, we may roll out to additional stores this year."
Amex has dabbled in prepaid cards in the past, but made a bigger push last year when it released one that lacks most of the fees that competing products charge. Such fees, including ones for monthly maintenance, ATM transactions, point-of-sale transactions, reloading and other activities, have been a lightning rod for consumer advocates who argue many prepaid cards harm customers.
The bluebird card is similar to other Amex prepaid cards in that it does not carry a monthly fee, purchase fee or activation fee. It also offers one free ATM withdrawal each month, followed by a $2 fee for each subsequent withdrawal.
The card is the latest financial product to be made available by Wal-Mart, which also offers check cashing, bill payments, tax-preparation services and other prepaid cards.
For the last several years, Wal-Mart has offered its own prepaid card called the MoneyCard. That card is issued by General Electric Co.'s GE Money Bank and managed by Green Dot Corp., a Monrovia, Calif., company that also sells its own prepaid cards in Walgreen Co., CVS Caremark Corp. and 7-Eleven Inc. stores. Wal-Mart, which owns a small stake in Green Dot, has a contract with the company that runs through May 2015.
"Our relationship with Green Dot has not changed," the Wal-Mart spokeswoman said.
Green Dot does not view the bluebird card as a competing product, Steve Streit, the chairman, president and chief executive of Green Dot, said at an investor conference last month.
Amex, the largest credit-card issuer by spending, has been looking for new avenues for growth as conditions in its traditional business have improved. The company had been limited when it came to serving younger consumers as well as those with lower credit scores in the past because it doesn't offer traditional debit cards.
"For Amex, it's a recognition of the reality that more and more individuals are trying to avoid using credit and there's that move towards debit," said Ben Jackson, a senior analyst in the prepaid advisory service at Mercator Advisory Group.
Consumers loaded $40.8 billion onto open-loop prepaid cards, or those that can be used at multiple merchants, in the U.S. in 2010, according to Mercator. That figure is expected to reach $167.2 billion in 2014.
"Some consumers continue to deleverage and move away from credit products," American Express Chairman and Chief Executive Ken Chenault said last month during an investor update. "As they do so, we're finding that reloadable prepaid meets their needs and we're finding that it's a great way of attracting new segments of consumers to American Express."
Amex also launched a co-branded prepaid card last year with Target Corp., which has made the cards available in stores nationwide, and is partnering with universities to offer campus identification cards that include a prepaid account.
About 20% of the customers it acquired with reloadable prepaid cards had been turned down for one of its charge or credit products in the past, Chenault said last month.
The company is also testing a program in which consumers who use one of its prepaid cards may be offered, over time, a charge card, Kelly said.