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Bluebird Prepaid Card Represents Game Changer for American Express, Wal-Mart


And it's a bad omen for the prepaid market's old guard.

MINYANVILLE ORIGINAL It must have seemed like a Hitchcock film over at the GreenDot (NYSE:GDOT) headquarters last week.

After all, the company – long the dominant force in the prepaid card space – was under attack by birds. These weren't the normal winged creatures we see cruising the skies on a daily basis, though. Rather, it was a new prepaid card from American Express (NYSE:AXP) and Wal-Mart (NYSE:WMT) that was given the brand name Bluebird. In light of how attractive the Bluebird Card's terms are, the prepaid card market's old guard should be scared.

Not only does this new product counter the traditional grievance consumers have with prepaid cards by charging only a single fee – a $2 ATM withdrawal charge that's actually waived under circumstances – but it also offers a number of features that were either rare or completely foreign to the prepaid card market until now.

The Bluebird Card enables cardholders to load funds by simply taking a picture of a check, provides the ability to create sub-accounts with customized spending limits and account features, offers purchase protection for items that break or are stolen within 90 days, makes it possible to pay monthly billers that don't accept plastic, and does not assess a surcharge for foreign usage.

The combination makes it the only card on the market suited to each of a prepaid card's primary applications (i.e. checking account replacement, alternative check cashing tool, and a means of providing a child's allowance). In fact, the Bluebird Card is actually one of the cheapest options available to consumers, regardless of the role it will eventually play. And given how quickly prepaid cards are rising in popularity – consumers are expected to load 200% more onto them in 2013 than in 2010 – the prepaid card market is undoubtedly a lucrative one to corner.

This joint venture is indeed a significant cog in both American Express and Wal-Mart's overall business plans. In addition to the product's standalone profitability, it gives the former a product to market to the underbanked and people at the bottom of the credit spectrum, which are large consumer segments in which Amex currently has no presence. It also gets the latter closer to vertical integration and enables them to replace competitors' products in the retail space.
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