WMT: Financing The Masses

Takeaway: Walmart and American Express both stand to benefit from the Bluebird program with the former getting shoppers and the latter getting fees.

American Express (AXP) and Walmart (WMT) have teamed up to offer a prepaid debit card targeted at lower income consumers. The program is called Bluebird and what makes it noteworthy is the fact that Walmart is a partner in the program, which allows for  widespread distribution across the United States.

The card is similar to existing American Express prepaid cards; you sign up, get the card and can load it up via a checking account, direct deposit or reload packs called Bluebird Feeder Packs. With money going right from someone’s paycheck on to the Bluebird card, Walmart stands to benefit from cardholders spending their paychecks at their stores because they’re suddenly feeling “flush” with cash. 

Keep in mind that Walmart already offers prepaid debit card and check cashing services for its customers. This is another move for Walmart as it tries to get a toehold in financial services which it has been trying to do for years. WMT also has an interchange fee advantage. They are likely paying close to nothing on interchange rates when these cards get used in their store. Overall, the program will be a hit with AXP, WMT and lower income consumers.