Nerdcard's Anisha Sekar says "believe the hype" about this deal. Free to activate, no monthly fee, no charge for adding money to it at your local Walmart.
This could be a big deal for AmEx, which is fighting
(V), and many of their third-party processors. Expect higher transaction volumes, built on cash deposits, not credit risk. There's an opportunity to make a new pitch to merchants -- especially if they add a branded mobile payment solution.
This is an even bigger deal for Walmart. The cards help fend off competition from
(DG) units that may be closer. AmEx is considered an upscale brand -- its credit cards are the default at
(COST), which caters to the upscale consumer.
As Walmart builds out its network of "Neighborhood Markets," which
The Champion newspaper reported on recently
, this format can be driven closer to where these customers live -- and every store a bank.
Can these companies make money at these prices? Where are the costs? The stores and ATMs are installed. Beyond that, it's all electronic. It's all cash, not credit. Your competitors have much higher prices, so it could be easy to grab market share. You have a big-name brand this market trusts going to bat for you.
Competition is returning to a vast, nearly untapped market. Competitors will have to respond. Underserved consumers are going to be keeping more money in their pockets, and some big name brands will be using computer networks to make a lot of money.
It's a win-win-win. How often do you get to write that?
At the time of publication, the author was long COST.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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