Credit and Debit Card Ratings

AmEx Sees Surge In Prepaid Customers

Participants at last week’s Sanford Bernstein’s investor conference in New York City could be excused if they thought they had stumbled into a political rally. Giving the final formal presentation at the “Disruptive Trends in Financial Services” gathering, American Express Group President for Enterprise Growth, Dan Schulman, made an impassioned critique of the way the current financial system functions, or doesn’t, for the 50 percent of Americans who live paycheck to paycheck.

“There’s an epidemic of people being forced to the margins of our financial system,” Schulman said, citing statistics from the Federal Deposit Insurance Corporation (FDIC) that 70 million Americans are either unbanked or under banked, meaning they either lack a basic checking account or credit card. Tens of millions more, he said, are “unhappily” banked, forced to pay ever increasing fees for checking accounts that banks offered for free, in the past.

According to Schulman, this situation has forced far too many people to pay high fees and wait in long lines just to make basic financial transactions, like paying bills or cashing a check. Schulman gave the example of payday loans that aren’t immediately repaid incurring interest rates upwards of 500 percent. The belief that there is a fundamentally more equitable way to deliver financial services than what is currently offered by brick and mortar bank branches has led American Express to launch its low-cost Serve prepaid card and Bluebird checking account alternative. Schulman went so far as to say that it was a “defining mission” of American Express “to explode the paradigm that it’s expensive to be poor.”

If that is the mission at American Express, Schulman offered some pretty strong evidence that the company is making progress towards it. He told the conference that American Express has added almost 2.5 million new Bluebird and Serve customers since the beginning of the year. That brings the total number of customers to about 9.5 million. Additionally, Schulman reported that Serve and Bluebird customers have loaded about $1.9 billion into their accounts in the first four months of the year.

 

 

 

 

 

 

 

 

 

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Author: Shane Tripcony

  • AmEx Serve Cards Announcement Hits Green Dot

    AmEx Serve Cards Announcement Hits Green Dot

    When American Express announced earlier this week that its prepaid Serve cards can now be purchased at 4,100 Walmarts nationwide, the stock market reacted. But as a story on ABC News points out, Wall Street was mostly interested in what the partnership means for Green Dot, a major player in the prepaid card industry.

    And if the immediate aftermath of this major expansion in the availability of Serve cards to Walmart is any indication, Wall Street believes that Green Dot is in trouble. Indeed, in the two days after AmEx announced that Walmart shoppers could pick up its ultra low-fee Serve cards for $1.95 while buying groceries, Green Dot shares were down over eight percent.

    As the ABC News report makes clear, this is just the latest downturn in what has been a steep decline in Wall Street’s assessment of Green Dot. Not long after Green Dot held its initial public offering in 2010, it soared to over $60 per share. The company’s shares were trading at below $20 after the Serve announcement, which also included the news that the addition of thousands of Walmarts had helped AmEx create the largest free cash reload network in America.

    What’s behind this grim assessment of Green Dot’s prospects? According to Yahoo! Finance’s Mike Santoli, it comes down to competition. “Their whole business is being threatened because they collect prepaid fees off of these debit cards,” Santoli told ABC News. And the fee comparison doesn’t bode well for Green Dot. Consumers can pick up an AmEx Serve card and pay a $1 monthly fee compared to an average $5.95 monthly fee for Green Dot cards.

    There’s also a perception problem for Green Dot, argues Santoli. Both AmEx and Green Dot prepaid cards are available at Walmart. “The perception here is that Walmart is throwing its weight a little bit more behind AmEx than Green Dot,” he says.

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

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