American Express Launches a Low Cost Card
- American Express has launched a “new generation” prepaid card dropping all fees related to its on- and off-line use: online card payments, monthly fees, activation, account balance consultation, alerts, card replacement, conversion of foreign currencies, reloading via a bank account, first ATM cash withdrawal, etc.
- This new card enables the consumers to benefit from a large range of services as well as related advantages such as online management tools.
- Considering the high number of unbanked people (20% - source: The Detroit News, 20 June 2011) and the high commission levels related to the use of other kinds of cards, prepaid solutions are obviously imposing themselves as the fastest growing payment solution in the US: 140 billion dollars spent using prepaid cards in 2009, average growth of 21.5% of spent amount between 2005 and 2009 and reload amounts supposed to reach 552 billion dollars in 2012 (+67.3% vs. 2009).
- After having been the first issuer of free gift cards, American Express once again positions itself as an innovative player on the prepaid market with this low cost bank card and drops fees on a traditionally expensive product: these fees were hindering the development of the prepaid card market in the US. Also, in order to promote their use in this country, American Express also partnered with Consumer Action (American consumer association) to start developing a national training program designed to help people choose and use prepaid cards.
- American Express is positioned as a high-end player (targeting seniors with significant patrimony, and imposing higher commissions than generally applied to traditional cards), has started to change strategy in 2010: launch of two products for young people, of an online P2P payment platform (Serve), and new interest in low cost cards. All these initiatives do not fit in their initial strategy.