NEW YORK (3/28/13)--American Express announced Tuesday that its Wal-Mart Bluebird prepaid debit card will be backed by the Federal Deposit Insurance Corp.
The card, sold at Wal-Mart stores, has the American Express insignia and functions similar to a debit or credit card, with features such as mobile banking and roadside assistance. Customers can load up to $100,000 per year on the card and also write checks with the account (The Washington Post March 26).
Since Bluebird debuted six months ago, more than 575,000 customers have signed on, collectively putting more than $275 million into their accounts. Many customers did not want a traditional credit or debit card or could not apply for one because of bad credit histories, Dan Schulman, American Express president of enterprise growth, told the Post.
Bluebird could increase American Express's customer base because customers will be able to directly deposit government payments--such as military pay, Social Security and tax refunds--onto their cards, the Post said.
With nearly one million households leaving the banking system between 2009 and 2011, demand for the cards soared, the Post said. This year, the prepaid card industry is forecast to reach nearly $202 billion in revenue, compared with $28.6 billion in 2009, according to consulting group Mercator Advisory group.
American Express is considering implementing deposit insurance for its complete suite of prepaid cards, company officials said.
Most card operators--confronting heightened scrutiny from consumer advocates--have decided in the past few years to carry up to $250,000 in mandatory deposit insurance--offered through the FDIC--per customer, the Post said.
For credit unions, The Members Group's (TMG) reloadable Visa prepaid cards are already backed by FDIC insurance--up to $250,000 per customer, Konrad Christensen, TMG retail payments product manager, told News Now. "We've always had it," he said. "It gives credit unions peace of mind."
TMG creates customized, technology-driven card processing and payment solutions for credit unions and community-based financial institutions throughout North America.