K-Mart Prepaid Card Fails to Stand Out

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Kmart unveiled its version of the increasingly popular prepaid debit card this week, but, following the nationwide rollout of Chase’s game-changing Liquid, the product really doesn’t stand out.

The Halogen Prepaid MasterCard, offered by Green Dot, carries a $5.95 monthly fee. Cardholders are charged $4.95 to load money onto the card at any retail store via Green Dot’s Money Pack or $3.95 when loading the card via swipe at a Kmart store. ATM withdrawals within the MoneyPass network are free; out-of-network withdrawals cost $2.50 each. The card costs $3.95 to purchase at a Kmart store, but can be ordered online for free.

In many respects, the new card is pretty standard fare for prepaid products. The $5.95 monthly fee is in line with what Green Dot charges for its flagship product and you can certainly find products that have higher fee structures.

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But when you start to drill down, the card really can’t compete with the new prepaid products we are starting to see from banks and issuers. The aforementioned Chase Liquid, for instance, carries a lower $4.95 monthly fee and the card can be loaded for free at Chase ATMs and branches. American Express, which was really the first payments company to jump on the prepaid bandwagon, offers no monthly fee on its flagship card, and, instead, charges between $3.95 and $4.95 to reload.

Kmart defended the fee structure, saying not only were its price points in line with existing non-bank affiliated prepaid products, but that the threshold to have the fees waived had been intentionally set very low. Cardholders can avoid the monthly fee by loading at least $1,000 onto the Halogen card or making at least 30 purchases with your card during each billing cycle. There’s also no charge to load the card via direct deposit.

These options are nice, but they’re also really not anything to write home about. Mango Financial, for instance, actually credits its card’s $5 monthly fee when a cardholder loads $500 onto it in a given month.

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They also don’t explain why Kmart wouldn’t want to release a card that can compete with all existing products on the market, but Kmart spokeswoman Shannelle Armstrong says the store isn’t going after the same demographic.

“This is a prepaid product used in an unbanked way,” Armstrong said. “When a person has severed the relationship with a bank, they’ve done it for a real reason.”

While the idea that people are looking for banking alternatives is certainly believable following last year’s Bank Transfer Day, it remains to be seen whether consumers will discount any prepaid products simply because they are backed by a financial institution, especially since more banks can be expected to join the fold. Just yesterday, PNC Bank unveiled its own prepaid product with a fee structure very closely resembles Chase’s Liquid.

Image: robertstinnett, via Flickr