American Express Adds Cash Back To Serve Prepaid Cards
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NEW YORK (CBSMiami/AP) — American Express is looking to expand its customer base by adding a cash back feature to its prepaid debit cards.
The company has long relied on the corporate traveler and the well-to-do, but increased competition has forced it to look at new customers. Prepaid cards, which appeal to lower-income Americans and people who don't have traditional bank accounts, are a small and growing business.
CEO Kenneth Chernault has said American Express would spend heavily this year to create new products and keep its already existing customer base.
On Wednesday, AmEx will release a new Serve card that will give users 1 percent cash back on all purchases. It's the first time a prepaid debit card has offered cash back for every buy. Some prepaid cards offer cash back at certain retailers.
The monthly fee will be $5.95, so you have to spend roughly $600 a month to break even on the card.
AmEx entered the prepaid debit card market three years ago with a co-branded card with Wal-Mart called BlueBird. It launched Serve cards in 2013 aimed at consumers looking for a cheap alternative to a bank account. They have a monthly fee of $1, among the lowest in the industry.
Prepaid debit cards have become a product of interest for banks and regulators alike in recent years. Originally a product with high fees and limited uses, they have in many ways become bank account replacements.
Other recent card tweaks: Another new Serve prepaid card, announced earlier in August, that allows unlimited reloads. It's aimed at workers paid more often in cash, like waiters or bartenders, and has a monthly fee of $4.95.
Cash reloads on the current Serve card were $3.95 each, so the new card's monthly cost could be significantly cheaper for certain customers.
AmEx Serve customers have loaded $7 billion on their cards since launch and year-over-year spending tripled, said Stefan Happ, AmEx's chief commercial officer of enterprise growth.
Still, Serve and BlueBird don't have a significant impact on the company's profitability.
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