American Express Joins Prepaid Card Competition

Prepaid Debit Card from American ExpressAmerican Express Co. (AXP) expanded its prepaid debit card offerings this week by launching a new general purpose reloadable debit card called, simply enough, the “American Express Prepaid Card“. The card is not American Express’ first prepaid card offering – they’ve long offered their highly popular American Express gift cards, and recently launched a teen debit card product (called “PASS”) – however this is their first widespread offering of a general purpose reloadable card.

American Express’ offering is a strong entry into the prepaid market, and American Express claims its “revolutionary card” is a “Best in Class Everyday Payment Card with No Monthly, Recurring or Maintenance Fees.”

In a press release announcing the card, American Express described the card fee structure as “unlike other prepaid reloadable cards, there are no fees for purchasing the Card online, monthly maintenance, activation, balance inquiries, alerts, Card replacement, foreign currency conversion or loading via bank account. The funds on the Card do not expire, and if lost or stolen, the funds can be replaced. The first monthly ATM cash withdrawal is free, after which a $2.00 fee applies (bank network charges may also apply).”

The terms and conditions associated with the Amex prepaid card are nice and simple when it comes to explaining the fees. Here’s the whole list of fees:

“ATM Fee: No charge for the first withdrawal in each calendar month; $2.00 per each ATM withdrawal thereafter, assessed against the balance of the Card.”

How is that for short and sweet?

While the prepaid Amex card is refreshingly free of fees, there are a few limitations. First, the card features appear to be a work in progress. On the day the card was launched, there was only a single way to reload the card (by using another American Express card). Shortly after launch, two additional load options were added, including the ability to load cash using GreenDot MoneyPaks, and the ability to load funds from an existing bank account. Further, the Amex card does not include some features touted by other prepaid issuers, including card-to-card transfers, or bill payment.

We expect that American Express will add additional features as the card matures and as appropriate.

Whichever way the card evolves, American Express’ prepaid card program is going to be a force to be reckoned with in the prepaid market. The program is led by Dan Schulman, a prepaid and debit industry expert, and American Express is uniquely positioned with its closed loop processing infrastructure to provide cards with low fees and great benefits.

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