American Express Serves Up Powerful Prepaid Debit Card

American Express’ Serve prepaid debit card is getting updated with a host of changes that will make it comparatively one of the best cards for the underbanked in the market.

Serve was originally a platform that functioned as American Express’ mobile payments initiative, and then a mobile-wallet that partnered with mobile carriers. Now AmEx is going back to its roots by transforming the Serve brand into a highly competitive prepaid debit card.

Prepaid debit cards are usually rife with fees which hit the prepaid card holder whenever they want to withdraw, purchase, or load money on to their card.

AmEx’s Serve card has no withdrawal fees at in-network Money Pass ATMs, no fees for PIN or signature purchases, and cardholders can load cash for free at 7-11 or CVS. Third-party reload options such as MoneyPak and Vanilla Reload will charge fees. There is a $1 monthly fee that is waived with monthly direct deposits of $500 or more. There is a 2.7% fee for foreign transactions.

However, the Serve fee structure will provide a greater value for domestic cardholders in general. More importantly, Serve will also provide a linked, non-interest bearing savings account, called Reserve, that will encourage wise money management.

According to Stefan Happ, GM of U.S. Payment Options at American Express, “prepaid card customers who report reloading their cards say they do so an average of two times per month, with 10 percent reloading 5 times or more per month, adding money to Serve using these options could amount to a potential savings of between $72 to nearly $240 a year for certain customers.”

This is a very competitive offering from AmEx, but the question still remains: Why?

Happ says, “In 2011, in the U.S. alone, the underbanked spent $78 billion on fees and interest. American Express has a unique set of assets to address this emerging alternative financial services landscape. We believe great, simple to use, intuitive technology can reinvent the prepaid category and is the key to changing this dynamic.”

Targeting unbanked and underbanked consumers provides AmEx with a new market in drastic need of fair and easy-to-use financial products and services. AmEx is providing a real banking alternative that seems to work with their cardholders instead of nickel-and-diming them with fees.