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From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.
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And I'm Audie Cornish. The world's biggest retailer is looking to be the next big thing in banking, at least unofficially. Wal-Mart is launching a prepaid debit card with American Express. The two companies are targeting customers frustrated with the rise in banking fees and those consumers known as the unbanked - people who have dropped out of the banking system or don't have enough money to open an account. The new card is called Bluebird, and joining us to explain the card and what's at stake for both Wal-Mart and American Express is Stephanie Clifford. She's retail reporter for the New York Times. Hi there, Stephanie.
STEPHANIE CLIFFORD: Hi, Audie.
CORNISH: So, Wal-Mart already sells prepaid cards, they have money centers. How will the Bluebird card work and what makes it significant?
CLIFFORD: So, this is a joint partnership with American Express, as you said. That's one of the things that makes this stand out. The other brands that Wal-Mart works with on the financial front are not generally brands that most consumers have heard of. Amex, of course, is affiliated with high-income consumers and sort of has this luxury image. The other thing is that while Wal-Mart does have a prepaid card already, it's really basic. It's plain vanilla. This Amex card, by contrast, which is called Bluebird, has all sorts of features. You know, you can take a picture of a check and deposit it via your smart phone. You can call American Express' vaunted customer service. So it's a full-featured card, which speaks to the fact that not just low-income consumers, but also consumers who are annoyed with their current banks and checking accounts, are interested in this product now.
CORNISH: Now, Wal-Mart has tried to get a bank charter in the past. I mean, just a few years ago they abandoned their application for one because bankers and lawmakers and some consumer advocates really lobbied against them. So is this a backdoor way for Wal-Mart to become a bank?
CLIFFORD: A little bit. They say that they don't want to become a bank per se, but that they want to sort of mimic what a bank offers. So, you know, it's as close as you can get without a charter. So, Wal-Mart has financial centers now in more than 1,000 of its stores. You can cash a check, you can do a wire transfer, you can get a money order. And now you have sort of a mimic of a checking account. So it's starting to look a lot like a regular bank would.
CORNISH: So without all of the fees, the monthly fee, or the overdraft protection fee, or some of the other things that they say that Bluebird will not have, how are they going to make money off this card?
CLIFFORD: American Express makes money every time somebody swipes an American Express card. They get a percentage of the sale. And Wal-Mart and Amex did not disclose exactly what the financial terms between them were, but analysts think that Wal-Mart is probably getting some share of that revenue, too. So for Amex, the idea is to get all of Wal-Mart's customers, you know, millions across the country, using Amex cards which have about half the acceptance rate of a Visa or a MasterCard. So it could really expand Amex's network and thus, all the fees that they could get from these transactions.
CORNISH: Stephanie help us understand then what happens in terms of the regulation of these cards. What are regulators looking at, what are the concerns from consumer advocates?
CLIFFORD: Consumer advocates say that they may not be a good deal for consumers. A lot of the prepaid cards we see out there now have lots of fees. So it may not be a good value. This Bluebird card does seem to be a pretty good value. There are no fees for most transactions. However, that's not to say that they couldn't raise the fees or change the terms. So, the Consumer Financial Protection Bureau recently started looking into this prepaid card market. They're concerned about how the companies are ensuring that the funds are safe because they're not backed by the FDIC, as a checking account fund would be. And also that the card terms and fees are transparent and fair to consumers.
CORNISH: Stephanie Clifford of the New York Times. She was talking with us about a new prepaid debit card offered by Wal-Mart and American Express. Stephanie, thank you.
CLIFFORD: Thank you. Transcript provided by NPR, Copyright National Public Radio.