Walmart and American Express announce Bluebird

In a fascinating development for the financial services industry, which will no doubt be of major concern to the Consumer Financial Protection Bureau and send major ripples through Washington, Walmart ( WMT) and American Express ( AXP) on Monday announced their new Bluebird cash card service, which will really serve as alternative bank account, with no balance minimum, no fees for deposits or withdrawals, unless made from an out-of-network ATM. Bluebird will also allow check deposits made through smartphone applications, direct deposits, and electronic bill paying, all for no charge.

The companies said that "if a customer's Bluebird card is ever lost or stolen, funds stay protected at American Express, and the card is replaced at no charge."

Additional Bluebird services that will be available for no charge include the "functionality of a digital wallet, including person to person (P2P) payments, mobile app functionality, and the ability to control subaccounts for friends and family right from a smartphone."

During the first quarter of next year, new services will be added for Bluebird customers, including "more options to deposit money and check-writing capabilities," the companies said.

Walmart made it clear that the companies were going after the "underbanked" market, as well as bank customers who may be "tired of navigating a complex maze of dos and don'ts to avoid the ever growing list of fees found on checking products," according to vice president of financial services Daniel Ekert.

Banks have been seeking ways to make up lost fee revenue through new checking account fees, after seeing revenue declines through the Durbin Amendment's limitation on debit card interchange fees, and other recent regulatory changes limiting checking account overdraft fees.

Walmart said that "according to an independent study by Bretton Woods, consumers now pay an average of $259 per year for a basic checking account and that cost is rising due to higher minimum balance requirements and a growing list of fees being added to these services."

Rochdale Securities analyst Richard Bove said that there is "no question this is a good deal for many consumers," but also hinted at what may be a regulatory can of worms for Walmart and American Express. "The politicians do not have to repeal the Dodd Frank legislation," he said, since Walmart "has done it for them."

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