This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Walmart, American Express Target the Unhappily Banked

At this point, overdraft facilities or a credit line are not available with the account. The companies hope to roll out additional features including check writing facility and more options to deposit money in 2013.

Customers can sign up for free at or get a $5 starter kit at a local Wal-Mart.

The accounts are not FDIC-insured but are 100% backed by American Express' Travel Services division, the company said.

Neither company would elaborate on how the economics of the product works nor how much money they expect to make from the product.

Banks have frequently defended their need to charge fees, arguing that it costs more than $200 a year to maintain an average checking account, which renders accounts with low minimum balances unprofitable.

They have also said they are forced to charge customers fees in response to the Durbin Amendment under Dodd-Frank, which caps the amount banks can charge merchants for debit-card transactions. Critics of the rule have said that it benefits big retailing giants like Wal-Mart and has little to do with the crisis.

Rochdale Securities analyst Dick Bove says the Durbin Amendment has allowed retailers to enter into banking turf.

"The Consumer Finance Protection Bureau (CFPB) was established by the Dodd-Frank Act to monitor all consumer finance activities of banks," Bove wrote in a note Monday. "New products are supposed to be approved by this agency before it is offered to customers. Was this product approved by the CFPB? If not are companies allowed to create whatever consumer financial products and sell them as long as they are not banks? Does this incent the creation of a large shadow consumer finance market?"

Bove believes that if up-market customers of banks begin to shift to Bluebird, banks stand to lose. He also expects more retailers will enter the fray increasing competition for banks.

Wal-Mart already offers prepaid debit card service along with Green Dot (GDOT - Get Report). Shares of Green Dot, which derives more than 60% of its revenue from the offering with Wal-Mart, plunged in Monday morning trading and were last down 18% on the news of Wal-Mart's new partnership with Amex.

Daniel Eckert, vice president of financial services for Wal-Mart said during the conference call that the company has no plans to drop its arrangement with Green Dot.

-- Written By Shanthi Bharatwaj in New York.
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AXP $64.26 -0.91%
BAC $14.13 -1.60%
GDOT $22.14 -0.23%
JPM $61.57 -1.58%
WMT $67.19 0.28%


Chart of I:DJI
DOW 17,651.26 -99.65 -0.56%
S&P 500 2,051.12 -12.25 -0.59%
NASDAQ 4,725.6390 -37.5850 -0.79%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs