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WASHINGTON — American Express Co. and Walmart Stores Inc. said Tuesday that their prepaid debit card accounts will be backed by the Federal Deposit Insurance Corp., making them one of the last major providers to sign on to the government backstop.

This is a significant move for the prepaid card market as it matures into a viable financial services industry, one that has experienced remarkable growth in recent years. Unlike checking accounts that carry up to $250,000 in mandatory deposit insurance per customer, reloadable prepaid cards are under no such obligation. Most card operators opt for the coverage, but until now American Express had not.


The use of reloadable prepaid cards has exploded in the wake of the credit crisis that left millions of Americans outside the traditional banking system. Prepaid cards act much like debit cards that are tied to a traditional bank account, but they do not enjoy the same consumer protections.

American Express said it was responding to customers’ requests to receive direct deposit of government payments, such as social security, military pay, and tax refunds. Government funds can only be deposited into federally insured accounts.

Insuring the cards, called Bluebird, could open American Express and Walmart to a larger consumer base — although the companies are not hurting for business. In the six months since Bluebird debuted, more than 575,000 customers have signed up, placing more than $275 million into their accounts. The card operates much like a debit or credit card.