AMEX BlueBird Transitions to Checking Account

AMEX BlueBird Checking Accounts

Source: American Express

For some time, those in the banking and financial industry have insisted the American Express prepaid debit card feels more like a checking account instead of a prepaid product. Turns out, American Express agrees and as a result, its co-branded effort with Wal Mart has transitioned into more of a checking account, including the addition of FDIC insurance protections as well as increases on how much consumers can load on their accounts. They’re also making available traditional paper checks for consumers. And who says the classic check is antiquated?

Old School?

Even if you think checkbooks are old school, there’s not much else on this product that you could say that about. AMEX BlueBird customers already have the option of snapping pictures of their deposits with their smartphones for immediate deposit into their accounts, pay bills, manage their account and the same other conveniences that technology has brought us. And now, those same consumers can add up to $100,000 into their accounts, versus the $10,000 that was previously allowed.

Looks like American Express is ready to step up its game. First, it took on the prepaid market and now it’s gunning for traditional bank accounts. For a limited time, a customer can order checkbooks for free. After that, they can order 50 checks at a time for $26. That’s high, of course, especially considering how far down the totem pole the ability to write checks is as far as consumer choice. Maybe that was the goal: keep those costs high so that even though it’s available, many consumers will choose the more convenient options, like paying online.

Very Low Fees

Another reason this is a great choice is because of the incredibly low fees for keeping the Amex/ Wal Mart product. Remember, the BlueBird is built on the platform that services the other Amex prepaid product, Serve.

According to American Express, it wanted to create a better checking alternative than what traditional banks offer and because BlueBird was already in place, it’s was an easy decision to build on that and let it deliver everything today’s consumers need. Even the company understands that traditional checking accounts “feel 19th century-ish”,

We had a gap in servicing our customers, such as government employees or active duty (military) personnel. Adding these capabilities to Bluebird just further bolsters its value

said a representative with the company.

Wal Mart Factor

While American Express is definitely going to capitalize on its relationship with Wal Mart – and let’s face it, it’s a great deal for the giant retailer, too; it’s only had to provide the avenue for the product to travel, Amex is also working with other retailers. Mostly, though, it’s going to target Wal Mart, at least initially, because it will instantly create 4,000 bank branches. There’s a $5 kit that will be made available to consumers. And if you’re wondering how well the two brands are doing as partners, you should know that just eight weeks after Blue Bird’s launch, there were 575,000 American consumers carrying the prepaid card in their wallets. That’s more than impressive, especially considering things like the recession, the fact that it released it prior to the holidays (which in most instances would be smart, but for financial products, it can be risky because consumers aren’t looking to reshape their financial products during this time of year,) and of course, the worries that high unemployment would keep some from spending a whole lot during the Christmas season, it all makes for very successful launch.

Wells Fargo

So what’s going to the be one perk that really changes the game? More than likely, it’s the ability for Bluebird accounts to begin accepting government payments, such as Social Security checks and tax refunds. This instantly removes the criticisms that Bluebird was not federally guaranteed. And which bank is the lucky one that gets to hold these deposits? Wells Fargo is the one providing the FDIC backing. It really was a natural choice. If Wal Mart is the partner for offering the products, Wells Fargo is the partner for offering the protections and bank backing for the checking accounts. After a customer makes his deposit on his Blue Bird, American Express moves that money from its bank over to Wells Fargo within 24 hours

Twitter and Authentication

There’s a lot more that’s being offered, too. One of the biggest additions is its new authentication feature. Here’s how it works – when a customer writes a check, he receives instantly an eight digit authorization code from the Bluebird smartphone app. That number must then be written on the check. The funds are instantly set aside in the account for the check. If the receiver of the check wishes to ensure the funds are available (if he doesn’t believe the authentication code, though it’s not sure why one wouldn’t), he can call an 800 number and validate the check. This seems a bit time consuming and perhaps even intrusive. After all, if one has to go through all of that, then he’s better off just swiping the card. And if a card swiper or a retailer doesn’t accept credit cards, you’d think he’d at least not require his customer to jump through those kinds of authentication hoops. We’ll have to watch that aspect of it and see how it ultimately plays out.

Amex Tough to Beat

This really is a big step into new territory. It’s not at all surprising to know American Express is the one leading the pack. It’s emerged over the past decade or so as the credit card company to beat. It always seems to be a step ahead in innovative and fresh options for consumers. It’s also not afraid to use social networking, especially Twitter, for those use the Sync program. Indeed, with the new checking account feel, there’s a lot to be excited about if you’re a Blue Bird customer. It’s little wonder, then, that many are saying it’s a “very powerful free checking alternative.” Other comments we’re hearing from those in know include,

…the updated Bluebird features are going to be tough to criticize

and Brian Riley, a senior research director in the bank cards and retail banking practice at CEB Towergroup, said,

Amex executes like a champ, it’s always been right. I don’t see any hair on this thing at all. Bankers are not only going to have a tough time criticizing this, but they haven’t come up with a good competitor yet, other than Chase Liquid and what that lacks is a business partner.


About Author

David is a CPA and has spent the past decade as a financial adviser helping clients meet their fiscal objectives. With an appreciation for journalism, he has spent the past few years overseeing several financial columns as well as writing two previous finance blogs. He resides on the East Coast with his wife and two sons and has guided many through the recent recession while providing a no-nonsense approach to spending and saving.

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