Skeptics who saw the seeds of an eventual bank charter in theadvent of the Bluebird card, theprepaid card from American Expressand Wal-Mart, mayfeel vindicated as the companies announced Tuesday that depositsmade onto the cards will be eligible for FDIC insurance.

Amex said the insurance is needed to allow the cards to befunded with direct deposits such as Social Security.

“When we launched Bluebird last October, we were focused onserving the tens of millions of Americans who are not well servedby the traditional financial services industry. The unbanked,underbanked, and the unhappily banked are beset by onerous fees andnumerous inconveniences,” said Dan Schulman, group president,Enterprise Growth, at American Express in the companies'announcement.

“Bluebird is designed to help make their everyday financiallives easier, more convenient and less expensive. Today'sannouncement, which reflects feedback from consumers, advocacygroups and government officials, represents the next set ofenhancements that further distinguish Bluebird from other financialservices options,” Schulman said.

In another change, the company announced that Bluebird cardholders would be able to obtain Bluebird checks for their accountsthat the company will “pre-authorize” in order to preventoverdrafts.

Bluebird cardholders wishing to use one of the checks willinform Bluebird of the check and receive a “preauthorization code”they will include on the back of the check. At the same time, theamount of money on the check will be removed from available fundsin the account, the companies said.

The addition of FDIC insurance represents an apparent reversalof the companies' position when they first released the card inOctober 2012. At that time, they said they would not seekFDIC insurance for funds deposited on the card.

When asked directly by a reporter in an Oct. 9 webcast andconference call whether funds deposited on Bluebird would carryFDIC insurance, Schulman said only that funds deposited withBluebird would be subject to money transmittal regulations in all50 states that required American Express to back them 100%.

What changed the companies' minds, according to Amex spokesmanVanessa McCutchen, was a desire to enable consumers to directlydeposit government payments, such as Social Security, and otherpayments on the card which require FDIC insurance.

“As we've begun to gain scale with Bluebird and listened to ourcustomers, it was clear that the ability to load federal paymentsand benefits directly to Bluebird accounts was something ourcustomers were very interested in,” wrote McCutchen in an emailedresponse to a question about the insurance.

“Regulations allow federal payments such as tax refunds andSocial Security payments, to be directly deposited into a prepaidcard account only if the card is set up to meet therequirements for FDIC insurance coverage,” McCutchen said.

She said funds in all permanent Bluebird accounts will beeligible for FDIC pass-through insurance.

“Funds loaded onto a permanent Bluebird account will be held ina pooled account at an FDIC-member bank. FDIC insurance will not beavailable for funds loaded onto a temporary Bluebird card,” theAmex spokeswoman added.