Amex Looks Further Downmarket with Cashback Prepaid Card

serve_cardAmerican Express announced a prepaid card with 1% cash back today, calling the card the first and only one of its kind.

Debit reward cards became rarities after the Durbin Amendment slashed “swipe fees” earned by issuers in 2010. Retailers, who won out with Durbin, issued some brand-specific rewards cards, but consumers largely lost the general rewards that were once commonplace. Durbin also arguably caused some debit-specific startups, such as PerkStreet, to cease operation altogether.

Amex, fresh from the loss of its Costco business, which was captured by Citigroup-issued Visa cards, seems to be targeting lower-income consumers with a new prepaid Serve card offering 1% cash back on purchases. The average prepaid consumer can save $400 with 1% cash back, according to the U.S. Department of Labor, which estimates an average annual expenditure of nearly $42,000.

“With the American Express Serve Cash Back Card, 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,” said Stefan Happ, chief commercial officer, enterprise growth at American Express.

Customers can see their cashback balances online or on the Serve mobile app and choose to redeem the value right away or hold onto the balance. Serve customers also have the opportunity to use direct deposit to their cards, use online bill pay, and withdraw cash free from 24,000 MoneyPass ATMs. The monthly fee for Serve cards is $5.95.

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Philip Ryan is Senior Editor of Bank Innovation and Senior Director of INV Fintech. He began covering financial services in 2012 and has more than 15 years' experience in online journalism, which makes him quite old. He can be reached at

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2 thoughts on “Amex Looks Further Downmarket with Cashback Prepaid Card

  1. Debit rewards are now “rarities?”

    We are supposed to believe that banks are so pinched by debit reform – even though the banks themselves concede they’re still making an extravagant 500-percent profit – that they’re dropping debit rewards?

    That seems highly unlikely, given that bloated profit figure. And indeed the article cites no numbers to back its assertion. That’s because this is bank disinformation that keeps popping up because the banks don’t want genuine reform to come to this uncompetitive market.

    Let’s instead look at the facts: The Mercator Advisory Group, impartial experts on the card industry, found, in the words of the Credit Union Times trade publication, that “debit reward programs are alive and kicking despite their predicted death via the Durbin Amendment.”

    The banks are putting out an enormous amount of distorted information about debit reform, which brought a modest measure of competition to a market whose purpose remains price-fixing and gouging merchants.

    These huge, unfair “swipe fees” on debit and credit card transactions raise prices for consumers, keep retailers from expanding and ultimately crimp our economy, since retailing is such a huge piece of it. For many retailers, swipe fees have burgeoned into their second-largest operating cost after labor.

    It’s time to seriously discuss reform. But that won’t happen if bank propaganda keeps clouding the issue.

    Michael Flagg
    Merchants Payments Coalition

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