Serve from American Express: Prepaid 2.0?


You may have seen advertisements lately for a product called “American Express Serve,” which is being touted by the company as a “digital prepaid account.”

But first and foremost, it’s yet another prepaid credit card from American Express, which already offers prepaid credit cards.

What gives? Why would they offer another prepaid credit card if they already have existing ones?

Well, just like their credit cards, prepaid credit cards can target certain demographic groups, with Serve most likely going after the underbanked youth.

By “underbanked,” I mean consumers who don’t have access to a bank account (or a credit card for that matter) for whatever reason.

And lately there has been a surge in the use of prepaid credit cards as opposed to traditional banking services.

One could even argue that these cards (and their related services) are replacing brick-and-mortar banking services.  Okay, enough of my rant, let’s talk about Serve.

Serve: An Alternative to Debit?


As mentioned, Serve is a prepaid credit card, but also so much more than that, considering American Express calls its an alternative to debit cards.

With Serve, you get a reusable Serve Card, which looks and feels just like a credit or debit card.

The card can be used both online and in stores where American Express is accepted, and also comes with 90-day purchase protection.

There is a $1 monthly fee to use Serve (no fee in NY, TX, or VT), which is waived if you do any of the following each statement period:

– Receive a direct deposit
– Add $500 or more to your account (monthly)
Add your Serve Card to the Isis Mobile Wallet

You can add money to the Serve card in a number of different ways, though not all methods are free.  The simplest way is via a linked bank account, which allows you to load up to $1,000 a day via ACH transfer.

You can also add up to $200 per day via debit ($1,000 monthly limit) and $200 per day via credit card ($1,000 monthly limit). This is a great way to meet a minimum spending requirement if you’re trying to get a sign-up bonus.

But note that if you load money via a linked credit card, the credit card issuer may charge a cash advance fee, which is scary to say the least.  So take caution when loading via plastic. Start with a small amount to test the waters if you’re not sure.

Finally, you can use a MoneyPak® to load money, though this too comes with a fee, usually up to $4.95.

If you want to withdraw money from an ATM, Serve will waive the first $2 fee each month, but ATM owner fees still apply.

So Serve doesn’t sound like it can replace a debit card, given all the fees involved, not to mention the limits. But let’s learn more.

Serve Makes Sending and Receiving Money Social

Where Serve shines is via its money transfer technology, which you could refer to as a “digital wallet,” similar to PayPal. There are four very “2.0” ways to move your money.

First, you can use the Serve App (for iPhone or Android) to send and receive money on the go. Or you can send and request money via e-mail.

If that’s too boring for you, there’s also the option to receive and send money via text messaging.

And finally, there’s the option of sending and receiving money via a Facebook wall post. Ooh la la.  All these P2P payment methods are free.

Serve also offers roadside assistance (though it’s not free if you actually use it) and access to presale tickets for events in cities nationwide.

Bonus: If you want to earn rewards, there’s also an option to do so via Zynga. So if you play games like FarmVille, CityVille, or CastleVille, you may be eligible for in-game rewards.

The Verdict

Serve has some pros and cons. The good is that there are no account opening fees, monthly or annual fees to use the card, unlike some other prepaid credit cards (The Approved Card), assuming you meet the rather simple requirements.

Additionally, it doesn’t require a credit check, which makes it a good choice for someone lacking in the credit history department.

And if you only plan to load money to your Serve Card via ACH (which is free) and/or credit card, then it could be a nice extension to an otherwise boring checking account.

But if you load money via the other methods, it could get expensive in a hurry, and really might be more trouble than it’s worth.

Sure, it might be cool to use all the social features Serve offers, but many of the brick-and-mortar banks are catching up, and beginning to offer apps and other 2.0 stuff to make their products more appealing to today’s youth.

So Serve could wind up being somewhat redundant (and expensive) for some customers. Be sure to also check out American Express Bluebird, which offers different benefits with fewer fees.

Tip: If you’re looking for similar alternatives, check out PerkStreet and ING Electric Orange.

By Colin Robertson

Colin created this blog after spending several years in a job that required him to scour credit reports on a daily basis. His goal is to help individuals better understand their credit and get the most out of credit cards.

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