Oct. 8 (Bloomberg) -- American Express Co., the biggest U.S. credit-card issuer by customer purchases, reached a deal with Wal-Mart Stores Inc. to expand sales of the lender’s Bluebird reloadable prepaid card.
Consumers can load money onto the cards at Wal-Mart locations or electronically through their bank accounts, and use them as they would a debit card where American Express is accepted, the lender said today in a statement. Bentonville, Arkansas-based Wal-Mart, the world’s biggest retailer, began testing the product at some stores last year.
The agreement may help New York-based American Express, which doesn’t issue debit cards, expand beyond its core credit-and charge-card business and drive more spending to its global payments network. Targeting Wal-Mart customers also contrasts with AmEx’s traditional focus on affluent consumers.
“Bluebird is our solution to help consumers who currently may be poorly served by traditional banking products,” Dan Schulman, group president of AmEx’s enterprise growth business, said in the statement. “In an era where it is increasingly ‘expensive to be poor,’ we have worked with Wal-Mart to create a financial-services product that rights many of the wrongs that plague the market today.”
The partnership also may threaten sales at Monrovia, California-based Green Dot Corp., a prepaid-card firm that derived 64 percent of its revenue through Wal-Mart in the first half of 2012, according to an Aug. 9 regulatory filing.
Green Dot rallied 9.6 percent to $24.25 on July 2 after Ramsey El-Assal, a Jefferies Group Inc. analyst, said Wal-Mart was winding down the AmEx pilot and that Bluebird sales were “significantly weaker” than Green Dot products. The stock has plunged 47 percent since then and closed at $12.85 on Oct. 5. Wal-Mart was among Green Dot’s biggest shareholders as of March 31, with a 6.2 percent stake, data compiled by Bloomberg show.
American Express closed last week at $58.56 a share and has gained 24 percent this year, outpacing the 11 percent advance for the Dow Jones Industrial Average.
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