Skeptics who saw the seeds of an eventual bank charter in the advent of the Bluebird card, the prepaid card from American Express and Wal-Mart, may feel vindicated as the companies announced Tuesday that deposits made onto the cards will be eligible for FDIC insurance.

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

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

“Bluebird is designed to help make their everyday financial lives easier, more convenient and less expensive. Today's announcement, which reflects feedback from consumers, advocacy groups and government officials, represents the next set of enhancements that further distinguish Bluebird from other financial services options,” Schulman said.

In another change, the company announced that Bluebird card holders would be able to obtain Bluebird checks for their accounts that the company will “pre-authorize” in order to prevent overdrafts.

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

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

When asked directly by a reporter in an Oct. 9 webcast and conference call whether funds deposited on Bluebird would carry FDIC insurance, Schulman said only that funds deposited with Bluebird would be subject to money transmittal regulations in all 50 states that required American Express to back them 100%.

What changed the companies' minds, according to Amex spokesman Vanessa McCutchen, was a desire to enable consumers to directly deposit government payments, such as Social Security, and other payments on the card which require FDIC insurance.

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

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

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

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

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Amex, Wal-Mart Bluebird Card to Carry FDIC Insurance

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