American Express chief executive Ken Chenault says the company’s new Bluebird prepaid card is off to a promising start.
During remarks at the Goldman Sachs Financial Services Conference in New York Tuesday, Chenault said that approximately 80% of Bluebird enrollees are new to American Express, and 45% of purchasers are under age 35. The prepaid card is part of the company’s gambit to expand beyond its traditionally affluent customer base.
“With Bluebird, we’re moving into a new customer segment,” he told the audience.
The Bluebird card is being issued with Wal-Mart, and customers can reload their cards in Wal-Mart stores.
Launched in October, the card carries lower fees than many of its competitors – a business model that Chenault suggested is feasible in part because American Express owns and operates its own payment network, which means that its operating expenses are largely fixed.
Chenault said the majority of money being spent on Bluebird cards is taking place outside of Wal-Mart stores – “an indication that purchasers are not viewing Bluebird simply as a store card, but as a broader payment solution.”
He also said that one month after the product’s launch, about 15% of the funds being loaded onto the cards were coming from direct deposit. Prepaid card issuers are pushing customers to enroll in direct deposit because the cards become much more profitable when consumers use them for a long period of time.
“Now we’ve certainly been pleased with our progress so far, and we have been running ahead of our internal projections,” Chenault said “We need to generate substantial scale to achieve the full financial benefit of our investment. But while it’s still early days, we’re certainly encouraged by what we’re seeing.”