UPDATE 4-Wal-Mart, Amex offer card for lower-income shoppers

* Bluebird card available next week at Walmart stores,online

* Check-writing capability, other features, coming next year * Shares of rival card companies NetSpend, Green Dot tank * Wal-Mart, Amex shares largely unchanged

(Adds consultant comment, bylines)

By Martinne Geller and David Henry

NEW YORK, Oct 8 (Reuters) - Wal-Mart Stores Inc andAmerican Express Co are teaming up to offer a prepaiddebit card called Bluebird to target lower-income shoppers whodo not have bank accounts.

The Bluebird, which can be used anywhere that acceptsAmerican Express cards, not just at Walmart, is similar to achecking account, but without minimum balance requirements ormonthly, annual or overdraft fees. It will accept payroll directdeposit, smartphone deposits, and will make mobile payments andperson-to-person transfers.

The card gives American Express access to Walmart'stypically lower-income shoppers, who often do not have bankaccounts. It also adds to Walmart's goal of being aone-stop-shop covering consumer needs well beyond merelyshopping.

"Bluebird is our solution to help consumers who currentlymay be poorly served by traditional banking products," said DanSchulman of American Express. The card is aimed at those who donot have bank accounts or those they are frustrated by the feestheir banks charge.

Prepaid card accounts are not subject to as many governmentregulations as traditional bank checking accounts, rearchers atthe Pew Charitable Trusts said last month. [ID:nL2E8K56AJ}

The U.S. Consumer Financial Protection Bureau is looking toimpose restrictions. Of particular concern is fees foroverdrawing accounts.

The Bluebird accounts do not currently run that risk becausethey do not allow holders to spend more money than they have onthe cards. Schulman declined to say how the company will handlethe issue once it allows customers to write checks on theaccount.

Shares of prepaid card companies Green Dot Corp andNetSpend Holdings Inc fell nearly 20 percent and 6percent, respectively on Monday, as the entry of bigger playerswith deeper pockets stands to pressure the business of thecompanies that pioneered these products.

Bluebird also brings a new threat to the relationships bankshave with their customers. If the deal with Walmart works forAmerican Express, the financial services company could takemarket share from other banks.

"This is one salvo," said Toos Daruva, a consultant inMcKinsey & Co.'s North America banking and securities practice."All banks need to try to figure out who is friend, who is foe,who they are going to partner with and who they are going tocompete against in the world of retailers, telecoms andtechnology players."

Wal-Mart, the world's largest retailer, has long tried toserve its lower-income shoppers who have little or no access tocredit. It offers check-cashing at low rates and other servicesas it tries to appeal to shoppers without bank accounts.

SW Retail Advisors founder Stacey Widlitz noted that dollarstores - which include Family Dollar and Dollar Tree

- have been trying to wrestle market share from Walmartby adding more groceries and payment types.

"But Walmart isn't lying down and taking it quietly,"Widlitz said. "The Amex card is another way to appeal to thelow-income consumer."

Bluebird will be available next week online and in more than4,000 Walmart stores in the United States, the companies said.Paper check-writing capabilities, and other features, will beavailable next year.

Users will be able to put money onto the card throughpayroll direct deposit, remote check capture with a mobileapplication, with cash at a Walmart register, or by linking to abank account.

Cash withdrawals from American Express' ATM machines carryno fees or surcharges for customers enrolled in direct deposit.For those without direct deposit, withdrawals are $2. Forout-of-network ATMs, each withdrawal is also $2 and additionaloperator fees may apply.

Walmart and American Express declined to reveal the terms oftheir agreement, or detail exactly how they will make money fromit, beyond offering value-added services.

Exact customer terms for the new accounts will be postednext week when the the new cards become available, an AmericanExpress spokeswoman said.

Walmart has said in the past that about 85 percent oftransactions at its U.S. stores are paid for with cash.

Green Dot shares slid $2.56 to $10.29 on the New York StockExchange, while NetSpend was down 66 cents at $10.09 on theNasdaq. Wal-Mart's shares gained about 4 cents and AmericanExpress shares were up 6 cents.

(Additional reporting by Jed Horowitz; Editing by MaureenBavdek and Leslie Gevirtz)

((martinne.geller@thomsonreuters.com)(646 223-6023)(ReutersMessaging: martinne.geller.reuters.com@reuters.net))