Dive Brief:
- According to a press release Thursday, American Express launched its first-ever debit card in the U.S. this week with a new checking account offering for small- and mid-sized businesses.
- The account, with full-service digital banking, doesn't require a minimum balance, earns 1.1% on balances up to $500,000, and can be connected to other Amex credit cards, according to the statement.
- There are no monthly fees with the new checking and debit card account. While new accounts can earn a $300 deposit bonus, customers won't start earning reward points or redeem them until next year.
Dive Insight:
Amex has been issuing credit cards for decades, so it's a big moment that it's now coming to the debit card business. The timing might have something to do with the rise of debit card use since the start of the COVID-19 pandemic last year. As the deadly virus led to lockdowns nationwide, consumers stuck at home and uncertain of their economic situations cut back on credit card use. They also ramped up spending on their debit cards.
The move by Amex follows the roll-out of a business checking account offering by its Kabbage unit in June. New York-based Amex acquired Kabbage last year, tapping the fintech to increase its small business services.
Amex already has bank partners who issue their debit cards on the Amex network, mainly in Africa, Asia and Eastern Europe, a spokesperson for the company said.
Without a debit card offering, Amex was more vulnerable to the ups and downs of credit card spending. Its total card network volume dropped more than 30% during the second quarter last year, relative to 2019, as it experienced the worst of the pandemic's effects.
Third-quarter results at larger rivals Visa and Mastercard this year were buoyed by increased spending by consumers on their debit cards as lockdown conditions eased. That rise is plateauing now as credit card spending recovers.
For Amex, increased spending by millennials and Generation X consumers during the third-quarter helped offset a purchasing decline by older baby boomers. To help bolster results, Amex has maintained an extensive marketing campaign, spending some $5 billion this year to help attract more cardholders.
