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American Express Goes Down-Market With Wal-Mart

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Its Bluebird card is aimed at the "unbanked" and "under-banked."

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MINYANVILLE ORIGINAL American Express (NYSE:AXP) (AXP) has taken an unexpected down-market turn by creating a card for Wal-Mart (NYSE:WMT) (WMT) shoppers. In fact, the new Bluebird card is designed for the least affluent among them, the "unbanked" and the "under-banked."

Both companies may see an opportunity down the road among the anti-bank-that is, consumers who are fed up with their banks' fees and won't take it anymore if any other practical option is available.

"Our customers tell us that they are tired of navigating a complex maze of do's and don'ts to avoid the ever-growing list of fees found on checking products," Daniel Eckhert, vice president of financial services for Wal-Mart US, said in the statement by the two companies.

Bluebird, announced Monday, is a prepaid card with some of the attributes of a digital wallet. It aims to provide the most basic financial services to people who don't have a checking account. They'll be doing their banking instead at Wal-Mart, right at the checkout counter.

The Bluebird card will offer check deposits and bill payments via a mobile phone app, as well as direct payroll deposits and person-to-person payments. It can be used to get cash at ATMs or to make purchases at any store that takes American Express. They even get some of the usual Amex bennies like roadside assistance.

It does not have paper checks or overdraft privileges, as a checking account does.

But it also lacks many of the fees that banks charge on checking accounts, such as monthly or annual fees. The only fees evident in the announcement are avoidable: a $2 charge for transferring money from a debit card, and a fee for out-of-network ATM withdrawals.

In the announcement, the companies cite a study that estimates that Americans now pay an average $259 for basic checking account services.

That is, of course, the people who have checking accounts. About 8%, or 17 million Americans, don't have a bank account, according to a 2009 report by the Federal Deposit Insurance Corp. Another 18%, or 43 million, are "under-banked." They have accounts but still sometimes rely on check-cashing companies, pawn shops and pay-day loan outfits to get by.
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