American Express is introducing one of the payments industry's first prepaid debit cards with cashback rewards in an age where the best rewards are typically reserved for the more lucrative credit card market.

The card, to be called Serve Cash Back, refunds one percent cash for all purchases within 60 days and costs $5.95 a month. It is positioned for consumers who are either underserved or who "used to enjoy cashback offers from their debit cards but no longer do so," said Stefan Happ, the chief commercial officer of American Express Enterprise Growth.

Many banks stopped offering debit rewards after the Durbin Amendment (part of Dodd-Frank) mandated a cap on debit interchange fees. JPMorgan Chase, for example, specifically referred to the Durbin Amendment in the letter it sent to consumers explaining why it would no longer provide rewards for debit card purchases.

Amex's Serve Cash Back card carries the Serve branding Amex uses for prepaid and digital payment products built on the Serve platform. These cards, including the Walmart Bluebird card, are known for having lower fees than most prepaid cards.

But the Serve Cash Back card seems to have a different mission, according to Ben Jackson, the director for the prepaid advisory service at the Mercator Advisory Group.

"It's an attempt to bring the same kinds of rewards from credit cards and bring it down market," Jackson said. "Durbin caused a lot of debit card rewards programs to dry up."

The card is also the first to grant these rewards at all Amex-accepting retailers with no coupons or signups needed.

"No other prepaid products provide cash back on regular purchases so this is unique," said Tim Sloane, vice president of payments innovation at Mercator.

The promised one percent reward is "better than most people are earning on their bank accounts," Jackson added. "I think a lot of customers will be attracted by one percent."

But being attracted to a card may not be enough. Because of the product's monthly fee, "I have to spend at least $600 a month to just break even. A cardholder may not find that to be a really good value," Jackson said.

Bill payments and checks do not qualify toward earning cash back. Account fees and ATM transactions also do not earn rewards, said Amex spokesperson Kimberly Litt.

Only one other company in the world offers a similar card, according to Jackson.

The ForexPlus Platinum Card from HDFC Bank in India is the only other card in the world that is comparable to Serve Cash Back, according to Jackson. But even this card may not be directly comparable to Serve Cash Back, said Madeline Aufseeser, a senior analyst at the Aite Group who specializes in prepaid.

"The Forex card is a travel card, not a prepaid debit card. It's meant to be used instead of a travelers check and a cardholder can buy the card in one country and load it with currency from another country," Aufseeser said. "The Serve card is meant as a replacement for a checking account. These are different products serving different markets."

Amex's strategy with Serve is a response to a change in consumer sentiment, she said.

"Millennials are averse to going to banks," and the prepaid market "has grown exponentially over the last few years," Aufseeser said. The prepaid market has experienced an 18% annual growth rate for the last five years both in terms of the number of cardholders as well as the size of typical account balances.

"This is as good as — if not better than — any checking account," she said. "Very few give cash back on all purchases with a debit card."

Amex's Happ said he sees his new card as having substantial potential.

"We know consumers are looking to stretch their budgets and get more from every dollar they spend," Happ said. "We are defining a new standard in the prepaid industry and rewarding our customers where they’re already spending on everyday items such as gas, groceries and clothing."

Amex used U.S. Labor statistics from 2013—for gas, groceries, dining out, clothing, transportation and entertainment—to make an argument that consumers "could potentially earn more than $400 annuallywhen earning one percent cash back."

Said Mercator's Jackson: "It will be interesting to see what kind of response they get from it and whether it really will change the landscape as much as they're expecting."

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