The American Express venture into the world of reloadable prepaid cards has been unprofitable thus far according to a new Bloomberg article.
At the beginning of last year, reloadable prepaid cards remained a profitless expense for AmEx, according to people with knowledge of the matter. Payments research firm Mercator Advisory Group estimates that the company has climbed no higher than sixth place among prepaid-card issuers.
Investors have also been concerned with the potential dilution of the AmEx brand and the fact that earnings for prepaids are not broken out:
Still, investors were skeptical from the outset about AmEx’s efforts to appeal to the masses. Going down-market risked diluting AmEx’s brand among America’s affluent, according to analysts including Jason Arnold at RBC Capital Markets. Such concerns were compounded as AmEx declined to break out the project’s earnings and market share. “If Serve had been successful, AmEx would have been out like a peacock bragging about it,” Arnold said. “The fact they kept so quiet for so long is, in itself, an indication these products never caught on.”
Check out the very interesting read including the evolution of Serve here.