Comments on: Amex’s aggressive move into prepaid cards http://blogs.reuters.com/felix-salmon/2011/06/15/amexs-aggressive-move-into-prepaid-cards/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: gstanski http://blogs.reuters.com/felix-salmon/2011/06/15/amexs-aggressive-move-into-prepaid-cards/comment-page-1/#comment-27980 Mon, 27 Jun 2011 23:44:01 +0000 http://blogs.reuters.com/felix-salmon/?p=8673#comment-27980 I like the AmEx prepaid card. They have their own reasons, but the card is actually very good, especially for consumers with no access to credit cards and bank accounts. http://blog.unibulmerchantservices.com/a mexs-new-prepaid-card-shows-how-issuers- will-fight-debit-fee-limit.

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By: Philon http://blogs.reuters.com/felix-salmon/2011/06/15/amexs-aggressive-move-into-prepaid-cards/comment-page-1/#comment-27705 Sun, 19 Jun 2011 17:14:21 +0000 http://blogs.reuters.com/felix-salmon/?p=8673#comment-27705 Banks no longer issue their own banknotes, as they did in the nineteenth century. On the face of it, this makes our present monetary system quite different from what it was formerly. But it is not so different after all: pre-paid cards are quite similar to banknotes (with exchange fees as an extra kicker).

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By: PHIPP http://blogs.reuters.com/felix-salmon/2011/06/15/amexs-aggressive-move-into-prepaid-cards/comment-page-1/#comment-27671 Fri, 17 Jun 2011 13:50:29 +0000 http://blogs.reuters.com/felix-salmon/?p=8673#comment-27671 Several companies have been in this space for a long time, hidden partially however, in the payroll conduit. Amex is just copying a business plan that has been operating very well for a 1/2 dozen years or longer! As for the fuzzy bank exemption for this slice of pre-paid- look no further than fee’s enjoyed by gov’t entries themselves, they pay back interchange monies to themselves for a lot of internal use of pre-paid, unemployment, SSI,etc.

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By: dyaseen http://blogs.reuters.com/felix-salmon/2011/06/15/amexs-aggressive-move-into-prepaid-cards/comment-page-1/#comment-27645 Thu, 16 Jun 2011 16:16:11 +0000 http://blogs.reuters.com/felix-salmon/?p=8673#comment-27645 I take your point, AnonymousChef, but I was looking at it from the other side of the equation. Felix was examining the motivations of the consumers, and I the retailers. I could see how a mass uptake of this product would indeed “[increase] the pressure on merchants to accept Amex as payment,” but there we run into a chicken-and-egg problem. Before the retailers could feel this pressure, there would first have to take place a mass uptake of the cards by consumers who would at first have relatively few places to use it. In order for this to happen, these consumers would have to be persuaded to tie up their cash in an inconvenient vehicle.

Given all of this, if bank debit card fees became truly onerous (imho), either consumers would switch to cash, or some new entrant would enter the market and massively undercut Amex with cheaper traditional checking accounts. With so much potentially at stake, Amex’s notion that they’re going to have their cake (sky-high interchange fees), and eat it too (take all the float on everyone’s captive cash) seems utterly fanciful.

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By: AnonymousChef http://blogs.reuters.com/felix-salmon/2011/06/15/amexs-aggressive-move-into-prepaid-cards/comment-page-1/#comment-27643 Thu, 16 Jun 2011 15:46:12 +0000 http://blogs.reuters.com/felix-salmon/?p=8673#comment-27643 Felix’s point, dyaseen, is that there’s a chance there will be a lot of marginal customers. If the banks follow through on their threats to riddle debit cards with extra fees, and AMEX offers a product which doesn’t need those fees because it is exempt from the Dodd-Frank fee cap, you may see a lot of people move to AMEX.

Felix doesn’t think its likely, but its a possible outcome.

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By: dyaseen http://blogs.reuters.com/felix-salmon/2011/06/15/amexs-aggressive-move-into-prepaid-cards/comment-page-1/#comment-27642 Thu, 16 Jun 2011 15:04:04 +0000 http://blogs.reuters.com/felix-salmon/?p=8673#comment-27642 IIRC, Amex already has, by a significant margin, the highest interchange fees in the industry. That’s why so many merchants refuse to accept them. I don’t understand what about these cards is so compelling that retailers will willingly give up ~2% of their revenue when they accept them. For the sake of the marginal customer? I don’t see it.

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By: REDruin http://blogs.reuters.com/felix-salmon/2011/06/15/amexs-aggressive-move-into-prepaid-cards/comment-page-1/#comment-27641 Thu, 16 Jun 2011 14:31:55 +0000 http://blogs.reuters.com/felix-salmon/?p=8673#comment-27641 The odds are this is just a play on traveler’s checks and all prepaid cards.
By making a prepaid card that can grab market share, they
1) Do exactly as Felix stated and grab higher interchange fees then they can on their normal cards

2) They collect interest on all outstanding balances on the cards that people have, which is a SIGNIFICANT sum of money on all such types of transactions.

Basically, they are trying to make a road for people to follow to their most profitable lines of business. That is ALL this is.

==+RED

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By: KenG_CA http://blogs.reuters.com/felix-salmon/2011/06/15/amexs-aggressive-move-into-prepaid-cards/comment-page-1/#comment-27637 Thu, 16 Jun 2011 01:26:04 +0000 http://blogs.reuters.com/felix-salmon/?p=8673#comment-27637 If there is no collusion, if there is no government protection provided to payment processors via political means, then the price of electronic payments will be driven by the cost to the processors, just like any other commodity consumer product. Which will be a lot less than it is today, because there is collusion and government protection of the credit and debit cartels that should be prosecuted runder the RICO act.

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By: dWj http://blogs.reuters.com/felix-salmon/2011/06/15/amexs-aggressive-move-into-prepaid-cards/comment-page-1/#comment-27635 Thu, 16 Jun 2011 00:51:00 +0000 http://blogs.reuters.com/felix-salmon/?p=8673#comment-27635 “But there’s nothing in Durbin which makes this product any more profitable for Amex”

Of course there is; a product is always going to be more profitable if its close substitutes are crippled or outlawed. Amex may well have decided that the volume it can achieve with this product in a post-Durbin world is big enough to cover fixed costs while in the pre-Durbin world it was not.

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