Green Dot Slammed on Walmart-American Express Deal (GDOT, WMT, AXP)

Wal-Mart Stores Inc. (NYSE: WMT) this morning announced an agreement with American Express Co. (NYSE: AXP) on a prepaid credit card called Bluebird that the two companies ran as a pilot program last year and canceled due to lack of interest. The announcement has had a nasty impact on shares of Green Dot Corp. (NYSE: GDOT), a prepaid credit card firm that gets the vast majority of its revenues from Walmart.

According to today's announcement, the Bluebird card will have no minimum balance and no monthly, annual or overdraft fees. There is a $2 charge when a customer adds funds to the card and for using out-of-network ATMs, both of which are transparent and within the customer's control, according to Walmart and American Express.

The Bluebird card can be used at locations that accept American Express cards. An American Express executive said:

The financial services landscape is changing. Technological advances, regulatory changes, and evolving consumer needs are redefining payments ranging from prepaid, to checking and debit. Bluebird is our solution to help consumers who currently may be poorly served by traditional banking products. It allows them to easily and safely move, manage, and spend their money. In an era where it is increasingly "expensive to be poor," we have worked with Walmart to create a financial services product that rights many of the wrongs that plague the market today.

Walmart has for years tried to get into the U.S. banking business, but has not had any success so far. This is a back-door entry into at least the credit-card part of the banking business, and it could be just an initial step into a more comprehensive banking offering by the world's largest retailer.

Shares of Green Dot are down more than 19% at the opening of trading, at $10.38 in a 52-week range of $9.05 to $35.25. Shares of Walmart and American Express are both up slightly.

Paul Ausick