Walmart, American Express to offer yet another option to people without bank accounts

American Express and Walmart have teamed up to launch a card-based banking system aimed at low-income customers who don't have bank accounts or only limited accounts, many of whom live in rural areas. The system, known as Bluebird, will allow for check deposits and payments by smartphone, has no minimum balance or monthly fees, and is Walmart's latest "foray into financial services," Barney Jopson and Tom Braithwaite of The Financial Times report. Customers will be able to make deposits at Walmart cash registers, and won't have to pay for overdrafts.

The announcement caused a 20 percent drop in shares of Green Dot, a card-based banking company that has already partnered with Walmart. American Express would not comment to The Financial Times about its investment in the program or how it would make a profit from it. Walmart previously tried to enter the banking world by acquiring a banking license in 2007, but failed. Its efforts have "triggered fierce opposition from some U.S. lawmakers and community banks wary of its power," Jopson and Braithwaite report. (Read more)

People moving away from traditional banks, loading pre-paid debit cards instead

A significant percentage of Americans have abandoned traditional banking, with 8.2 percent of households managing finances without a bank, according to Census Bureau data compiled by the Federal Deposit Insurance Corp. That's up from 7.7 percent in 2009. Another 28.3 percent of households -- an increase from 25.6 percent -- are "underbanked," or still have a bank account, but step outside traditional banking systems by using payday loans or prepaid cards, Gary Fields and Maya Jackson-Randall of The Wall Street Journal report.

The unbanked and underbanked may be disproprotionately rural. Some who have forsaken banks are irritated over banking charges, including overdraft fees that cost customers $31.6 billion last year, and others are spurred by the financial crisis and a loss of confidence in traditional institutions.

The fastest growing type of nontraditional banking is prepaid debit cards offered by NetSpend and Green Dot Corp. Customers can buy cards at grocery stores and load money onto them to pay for "a wide variety of purchases -- just as they would do with a regular credit or debit card," Fields and Jackson-Randall report. But, customers must buy the card and pay a monthly fee to keep it. (Read more)