Tuesday , January 31, 2023

American Express Adds Wal-Mart to the Distribution Network for Its Serve Prepaid Card

American Express Co. deepened its prepaid card relationship with Wal-Mart Stores Inc. with Monday’s announcement that its Serve card will be sold in 4,100 U.S. Walmart-branded stores.

The Walmart stores also will become part of Serve’s cash-reload network, boosting its location count to 19,500. Serve’s thus will become the biggest free cash-reload network in the country, AmEx claims. The network already includes about 15,000 CVS/pharmacy and 7-Eleven Inc. stores where Serve cardholders can reload their accounts without charge.

“The key here for us is we are really building our product in the bank-alternative space,”  Stefan Happ, general manager of U.S. Payment Options at New York City-based AmEx, tells Digital Transactions News. “A crucial part of that is the ability to load cash for free onto our digital account.”

While AmEx has an upscale reputation because of its original franchise in travel-and-entertainment charge and credit cards, the company aims its Serve product at the traditional customer base for prepaid cards—consumers with few or no bank accounts, the so-called “underbanked” and “unbanked.” With its low prices, Walmart is where many such consumers shop

Serve will add to an AmEx presence at Walmart that in addition to gift cards includes the Bluebird prepaid card. Bluebird is for Walmart customers who may already have a bank account but either are dissatisfied with it or want something to supplement it. Bluebird has more than 1 million accounts, and $2 billion has been loaded onto Bluebird accounts since the program started in October 2012, according to Happ.

With Bluebird and now Serve, AmEx hopes to have something for many Walmart shoppers. “We feel we have complementary products,” says Happ.

Serve will be sold in the prepaid card section at Walmart checkout lanes and Walmart MoneyCenters, the separate financial-services space in some of the leading retailer’s stores. The customer buys a temporary card for $1.95 and registers it online. A permanent, reloadable card will come in the mail a few days later, an AmEx spokesperson says.

Happ would not discuss terms of the Walmart-Serve deal, but says “we have a long-standing and profitable relationship with Walmart in the prepaid space.” The new Serve program “will be a really good thing for everyone in the value chain,” he adds.

AmEx is planning “a really unprecedented media campaign to build awareness of Serve,” says Happ. The campaign will have TV, radio, and digital components.

Serve’s new distribution at Walmart shows that AmEx is “highlighting the fact that it has different kinds of cards designed for different types of customers,” says prepaid card industry researcher Ben Jackson, a senior analyst at Maynard, Mass.-based Mercator Advisory Group Inc. “They’ve been quite comprehensive.”

Walmart did not issue a comment about Serve, but Monday’s news is the third development in a week involving the giant retailer and consumer financial-services provider. On April 21 Walmart added Euronet Worldwide Inc.’s Ria unit to MoneyGram International Inc. as a provider of in-store domestic wire transfers. Also last week, news broke that electronic gift card provider Gyft would no longer sell Walmart e-gift cards on the Gyft site.

Share prices of leading prepaid card program manager Green Dot Corp., issuer of the Walmart MoneyCard, dropped 9% Monday, presumably on the news about more competition from AmEx. Green Dot generated 64% of its operating revenues through Walmart in 2013, according to the company’s annual report.

Pasadena, Calif.-based Green Dot did not respond to a Digital Transactions News request for comment. But Mercator’s Jackson says Green Dot is adding products and has survived other stock selloffs when a competitive development seemed to threaten its business. “Every time something happens in the prepaid industry, Green Dot shareholders panic,” he says. “If Bluebird didn’t kill Green Dot, adding Serve isn’t going to, either.”

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