American Express Co. may build brand stickiness among younger consumers with its new campus prepaid identification card, one analyst contends.
Amex announced Nov. 2 the launch of the Osprey 1Card at the University of North Florida (
The move to add campus cards is part of Amex’s overall strategy to get its prepaid cards into the general market and to promote the benefits of having an Amex card (
“This is another extension for our prepaid card franchise, and the student segment seems like a natural fit for providing that product,” Stephan Happ, Amex senior vice president and general manager of the Americas, tells PaymentsSource.
Amex expects its prepaid campus card program to grow among colleges and universities because of its fee structure, Happ says. The card imposes no maintenance fee, and cardholders pay $2 for each ATM withdrawal after an initial free one each month.
“We are taking this segment very seriously, and we think we can get to a great scale because our product is significantly different from other campus card programs, he says.
The card also boasts the same benefits available to Amex credit and charge cardholders, including acceptance at any location that takes Amex, price protection and emergency roadside assistance, says Happ.
Ben Jackson, senior analyst at Mercator Advisory Group, says Amex is making a clear play for future cardholders. But the campus card market is a hotbed of activity for other issuers trying to achieve that goal, too, he says.
“There’s been a lot of interest in the campus card space because it’s a nearly captive audience that is easily marketed to,” says Jackson. “That starts to bring brand loyalty over time.”
Amex is targeting young consumers who are a good risk because most parents would provide constant funds for the cards, and the students would provide high transaction volumes, he notes.
One program drawback is that all stores that accept Amex will take the card, thus throwing out all spending controls that a closed-loop system would offer, Jackson says. Most campus card programs support only merchants on or near campus, he says.
“One of the reasons why campuses like [the closed-loop system] is because then you know the kids are not taking it to the bar and buying beer,” Jackson says. “So when parents load their money onto those campus cards, they know it’s going toward something to help the kids study.”
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