A More Inclusive American Express Paints Its Serve Prepaid Card Program Blue

Taking a cue from its Bluebird prepaid card for customers of Wal-Mart Stores Inc., American Express Co. today relaunched its Serve prepaid card with new features, more reload locations, and new retailer partners along with no reload fees at 14,000 7-Eleven and CVS/pharmacy locations, and a $1 monthly fee that can be waived with direct deposit.

Among the new features are direct deposit of paychecks and government payments, bill payment through Serve’s Web site and mobile app, mobile check capture before year’s end, and an associated account that AmEx calls “Reserve,” which is a no-interest savings account for the cardholder to build funds for a planned purchase or recurring bill payments.

The Serve card will get more reload locations in November through AmEx’s expanded relationship with prepaid card services provider InComm, which operates the Vanilla reload network. InComm has a strong presence in convenience stores and drug stores such as 7-Eleven and CVS, according to Ben Jackson, a senior analyst at Mercator Advisory Group Inc.

Further, cardholders will pay less for loading the product, provided they do it at 7-Eleven or CVS locations. Currently they must go to a store that sells Green Dot Corp.’s MoneyPak, which can cost up to $4.95. At the store, the customer pays the fee and the amount to be loaded, and the clerk swipes the bar code on the MoneyPak package. Then the cardholder gets an activation code but needs to call a voice-response phone number or visit a designated Web site to complete the process.

Under the new arrangement, all the customer has to do at a CVS or 7-Eleven location is give the clerk the amount of cash he or she wants to load and swipe the Serve card at the point of sale, for no fee. “It’s going to simplify the process and make it significantly less painful financially,” Stefan Happ, senior vice president and general manager of U.S. payment options at New York City-basedAmEx, tells Digital Transactions News. Outside of those two chains, cardholders can do reloads at MoneyPak or Vanilla locations for fees of up to $3.95 or $4.95.

Cardholders also can make free withdrawals at 22,000 ATMs in U.S. Bancorp’s MoneyPass surcharge-free network.

The card will have a $1 monthly fee, but it can be waived if the holder enrolls in direct deposit or loads $500 per statement period in any manner except a person-to-person transaction. AmEx says Serve cards can be purchased online at www.serve.com and will be available at more than 20,000 stores by year’s end, including CVS, Family Dollar, Office Depot, Walgreens and Duane Reade locations for a one-time price of $2.95.

AmEx recently added a savings account called SetAside for Bluebird cardholders that’s similar to Reserve. Unlike Bluebird, however, Serve accounts do not offer a check-writing feature. In addition to the Reserve savings account, AmEx also is providing Serve cardholders with personal financial-management content on Serve.com from the LearnVest Inc., a financial-planning service.

The revamped card represents an expansive view by AmEx of the prepaid market beyond the underbanked consumers considered to be its traditional core, which AmEx, citing Federal Deposit Insurance Corp. research, pegs at about 70 million consumers. Beyond that huge cohort, many prospective Serve holders may have bank accounts, but few are traditional customers of American Express, a brand built on appeals to the affluent. AmEx says a target market for Serve includes consumers making from $50,000 up to $150,00 in annual income.

“This launch is really the core example of us becoming a far more inclusive brand,” says Happ. “This is a product that we think is going to be relevant but also also attainable [by] up to 100 million consumers in America today.”

AmEx made a big play for some of these consumers when it launched Bluebird, which is sold at Wal-Mart locations. AmEx later enhanced that card with features that included federal deposit insurance. The Bluebird and Serve cards both run on the same technology platform AmEx acquired in 2010 from Revolution Money; AmEx first launched Serve in March 2011 as a digital payment system with a prepaid card.

“We’re pretty excited about relaunching American Express Serve as a bank alternative,” says Happ. “It’s really a complement to our Wal-Mart footprint.”

Jackson at Maynard, Mass.-based Mercator says AmEx may be doing some “very careful psychographic segmenting” in seeking new Serve cardholders. “This idea that prepaid is valuable to more than the underserved is one that is not always picked up,” he says.

Jackson also notes that prepaid card providers are all trying to find profitable formulas for reloading. “The holy grail for so many of these prepaid programs is direct deposit,” he says, adding that in regard to other forms of reloading, “the struggle is, is it better to have money loaded on the card or is it better to get revenue from those reloads?”

AmEx would not give specific numbers about the Bluebird and Serve portfolios, but their business unit has a total of 5 million accounts, says Happ.

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