Walmart Banks on Bluebird to Reach the Unbanked

Discussion
Oct 17, 2012

Even people with the least amount of money may be taking a techie approach to shopping in the future if Walmart and American Express have anything to say about it.

Walmart hopes to convert unbanked customers to a prepaid debit card, dubbed "Bluebird," in efforts to gain share of the demographic. Bluebird is touted as an alternative for consumers turned off by increasingly higher fees.

"Our customers tell us that they’re tired of navigating a complex maze of dos and don’ts to avoid the ever growing list of fees found on checking products," said Daniel Eckert, vice president of financial services for Walmart U.S., in a statement. "Bluebird solves this problem and we believe it’s the best product on the market to help customers affordably manage their everyday finances. At Walmart, we are always looking for ways to make a difference by using the strengths that come with our size, scale and reach to take on the challenges that matter most to our customers. Reducing the costs and frustration that come with high fees is one of these issues."

Bluebird doesn’t require a minimum balance or impose fees although it charges fees for services like out-of-network ATM use. Walmart’s existing MoneyCard prepaid card, run by the company Green Dot, costs $3 to buy, $3 a month and $3 to reload.

With Bluebird, money can be added for free and the cards will be accepted anywhere that takes American Express. Payroll direct deposits and smartphone deposits of photographed checks are accepted while holders can make mobile payments, do automatic bill pay and person-to-person transfers, according to Business Week.

Reuters adds, "American Express, best known for its affluent cardholders," would gain "a 4,000-store gateway to tens of millions of so-called ‘underbanked’ households and the fees they will generate as technology moves more of their transactions from cash to digital payments."

Reuters says David Robertson, publisher of The Nilson Report, which tracks the payments industry, believes "Walmart is doing everything it can to be a financial services provider to the largest number of Americans possible. … A surprising number of underbanked consumers have a smartphone they can use with a prepaid account to make purchases."

Forbes noted that although the FDIC finds 28.3 percent of all U.S. households conduct "some or all of their financial transactions outside of the mainstream banking system," FDIC and Consumer Reports have recently warned consumers about the dangers of prepaid cards since they’re largely unregulated and have fewer consumer protections.

Is Bluebird a bankable opportunity for Walmart? Do you think prepaid debit cards will play a more important role in the future of payments at retail? Do you see other retailers following Walmart’s lead in offering financial services to the unbanked?

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7 Comments on "Walmart Banks on Bluebird to Reach the Unbanked"


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Max Goldberg
Guest
9 years 7 months ago

This is a smart move by Walmart and a big win for under banked consumers. Walmart and American Express have created a card that does not come with the high fees of most debit cards.

The card should drive consumers into Walmart and create an opportunity for American Express to engage with a new strata of consumers.

Charles P. Walsh
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Charles P. Walsh
9 years 7 months ago

Since Bluebird will be accepted by any retailer who also accepts American Express, it doesn’t guarantee that a Bluebird card holder will spend all of their money at Walmart. However, it is a great way for Walmart to introduce competition in the bank monopolized credit/debit card industry and the associated high fees borne by retailers. It provides an additional advantage in that Walmart pays both a lower fee and may benefit from financial tie up agreements with the Branded Card issuer (in this case AMEX).

I think it is a terrific idea and believe it is only the beginning of the growth in alternative forms of payments that consumers will have access to.

Tina Lahti
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Tina Lahti
9 years 7 months ago

This is a great move by Walmart and American Express. It is also a great value for the consumer. I think the appeal of Bluebird could be well beyond the unbanked. It would be a great tool for parents of high school and college age kids. It may also be convenient for travelers, especially those who frequent parts of the world where ATM card cloning is common. I noticed that the foreign exchange fee is $0.

Tom Redd
Guest
9 years 7 months ago

Everything that Walmart does is all about scale and with Bluebird they found a huge underserved segment. Banking fees have been on the rise and come with complicated rules for a significant segment of the population — Walmart is targeting this underserved market using technology and the American Express partnership to bypass traditional methods of banking while providing a needed and affordable alternative service to millions. That’s innovative thinking and doing.

With the recent announcement for free heart, spine, and transplant treatment for employees (see RetailWire October 12th), seems that Walmart is re-writing how mega-corporations can succeed in doing good while making money.

Anne Bieler
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Anne Bieler
9 years 7 months ago

This makes so much sense for these consumers, where bank services are beyond current reach. The simplicity and convenience of this card plus the location and hours of retail outlets can make it viable. As Walmart expands their smaller format stores into urban areas, it will make shopping easier. A good move to watch.

Herb Sorensen, Ph.D.
Guest
9 years 7 months ago
I’ve said before that there are three components of retail: 1. closing sales with shoppers, 2. delivering the goods and 3. collecting payment. Amazon is the premier seller, Walmart the premier deliverer from supplier to shoppers (logistics) and whoever owns the money transaction piece, WHICH WILL BE DOMINATED BY SMART PHONES, will have a leg-up on everyone in retail in the next 10-20 years. Bluebird is a massive step to position Walmart to “own” their core customer base in terms of payment. This is/will be in direct competition with Apple and Google’s wallets, which will first affect mostly early adopters. Just as Apple and Google represent a clash of the titans, Walmart is staking their own position for the clash, in partnership with American Express. So Walmart has the in-store customers, and American Express as a partner, to establish hegemony over a major cohort of bricks shoppers — and is well positioned to link that (Walmart labs) with their developing shopper app (mobile,) to online Walmart. Don’t count out the world’s largest retailer in the… Read more »
Kenneth Leung
Guest
9 years 7 months ago

Given Walmart target demographics it is a very good fit for Walmart to offer banking services to the “unbanked.” Given its footprint and scale, and the acceptance socially of prepaid cards (how many people you know pay for their Starbucks with prepaid, and they have bank accounts), this should work out well for both Amex and Walmart.

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