Bluebird Will Offer Checking to Customers

January 25, 2013
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bluebird_chekcingBluebird, the novel American Express-Walmart joint venture, will soon offer its customers the ability to write checks from their accounts, Alpesh Chokshi, president of global payments for American Express, told Bank Innovation Friday.

Chokshi described Bluebird as epitomizing “the power of mobile,” so why take a step back into the old-fashioned world of checks? The short answer might be that the offering will help Bluebird compete with Green Dot’s GoBank, another startup aimed at Gen Y and the underbanked.

Bluebird, which American Express and Walmart launched last October, mimics the offerings of traditional checking accounts, but, said Chokshi, with far fewer fees.

Why do Bluebird’s customers, who are steeped in the world of mobile, need a throwback item like checks? “Not everyone accepts cards,” said Chokshi. “For example, you can’t use a card to buy Girl Scout Cookies.”

During American Express’s earnings call last week, CFO Daniel T. Henry, when speaking of revenue targets, said, “I think the early returns that we’re seeing on Bluebird in the reloadable prepaid space is another example where we think we can be successful.”

Chokshi backed up this claim with some solid numbers:

  • Approximately 80% of Bluebird enrollees are new American Express customers.
  • Approximately 45% of Bluebird users are under age 35.
  • Majority of money spent is outside of Walmart’s footprint.
  • Approximately 15% of money loaded onto Bluebird accounts is via direct deposit.

The last item is further evidence that Bluebird users are treating the product like a traditional checking account, depositing paychecks directly into the account, Chokshi said. Bluebird is taking a small step back into the quaint world of checks (Brett King predicts the last consumer paper check will be written in the year 2018) in order to keep pace with GoBank and Movenbank, another banking startup. The race for the mobile-savvy Gen Y customer is on.

 

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3 Responses to Bluebird Will Offer Checking to Customers

  1. anonymous on January 28, 2013 at 12:08 pm

    Another item for the Bluebird “to-do” list is to add account-to-account (A2A) transfers. Those with small amounts of funds shouldn’t be forced to wait for the delays of the ACH banking network. A check doesn’t really help that much if the funds are intended for transfer to another person who is “underbanked”.

    Actually, all that is really needed is for there to be a prepaid debit card that could spend funds from a Dwolla account (i.e., instantly, without having to do an ACH transaction).

  2. Patrice Peyret on January 28, 2013 at 2:05 pm

    Writing paper checks from a prepaid card account is actually a big deal: Plastyc has included the service for several years in its UPside Visa cards, and it turns out to be pretty essential for people who need to pay their rent, because most landlords will not take a card or cash or an ACH.
    The largest deployment of cards that offer on-demand check writing is the Emerald Card from H&R Block, also now powered by the Plastyc platform for all online services.

    Both American Express and Green Dot are playing catch up on this, but glad to see that the industry is closing the last remaining functional gap between prepaid accounts and checkng accounts.

  3. [...] Innovation reported in January that Bluebird was planning to offer checks soon. This was a major development, even though its many [...]

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