REDbird to be rolled out nationwide, and other hints from a recent focus group

Note: As of October 13, 2015, the Target REDcard (REDbird) can only be loaded with cash in-store at Target. Gift cards and/or debit cards no longer work to load REDcard. For more info, see: Here is the REDbird memo, “Cash is the only tender guests can use”

As of May 6, 2015, Target no longer accepts credit cards for in-store REDbird reloads. For more information, please see “REDbird Post Memo Answers“, and “REDbird grounded. Now what?“

REDbird is the nickname I use for the Target Prepaid REDcard.  The nickname serves two purposes: it clearly differentiates this Target REDcard from the other two Target REDcards (debit and credit); and it conveys important information: this card is very similar to Walmart’s Bluebird card.  Bluebird and REDbird are so similar, in fact, that each person is only allowed to register one or the other (or another similar card: Serve).  For more about these American Express prepaid cards, please see: The complete guide to Bluebird, REDcard, Serve, and SoftServe.

While there are many important differences between these cards, there are two key differences that I’ll discuss in this post:

• REDbird can be reloaded in-store (Target) with a credit card (or debit card, or cash).  Bluebird and Serve can be reloaded in-store (at Walmart, for example) only with debit or cash.
• REDbird is currently only available in test markets.  Bluebird and Serve are available everywhere in the United States.

Recently, a reader was invited to a marketing focus group with select REDbird (Target Prepaid REDcard) customers.  While the purpose of the focus group was for American Express and Target to learn from their customers, this reader was able to glean a bit of useful information from the focus group moderator…

Nationwide roll-out is coming. We don’t know when.

From the beginning it has been clear that Amex and Target have been test marketing REDbird.  In approximately half of the test market they sold the starter card for $5. Everywhere else, the card was free.  Clearly they were trying to determine whether or not a $5 fee was a deterrent.  The part that hasn’t been clear is whether they would ever roll out the card nationwide.  If the initial tests went poorly, would they scrap the whole project?  The good news is that the focus group session strongly suggested that Amex and Target are planning a nationwide rollout.  Here are quotes from the reader who attended the focus group (bolding is mine):

The first half was dedicated to questions about the card’s features; the second half was purely marketing, e.g. do you like this card package or this one?, is there anything confusing about the instructions?  During the second half the moderator advised that they were going to roll out the card country-wide (she did not say when) and wanted to ask us some questions to make sure they got it right.

..

The second half of the session, the marketing part, contained a lot of questions about the color of the packaging, the size of the AmEx logo, the instructions that came with the card, the conversion to chip + pin (which is apparently going to be rolled out later this year, perhaps in conjunction with the nation-wide roll-out of the card?), etc.

While I hope that the rollout will be sooner, my best guess is that the nationwide rollout will be a year from the date that the cards first hit shelves in the test markets.  In other words, I’m predicting an October 2015 nationwide rollout.  Hopefully the rollout will be accompanied by some things lacking in the initial rollout: a mobile app, Amex Sync Offers, etc.

The future of credit card loads remains unknown

The focus group attendee was most interested in the future of credit card loads, so he detailed related parts of the focus group session (bolding is mine):

My group had 7 people and the moderator.  Of the 7 people in my group 4 had professional-type jobs and 3 did not.

…

The four professionals were clearly only using the prepaid card because of the ability to reload it with a credit card.

…

I stated that I saw the card in a Target store in Cleveland … and became interested in it because I already had a Target credit card.  I stated that the ability to load it with a cc was attractive to me because that way I could save 5% like I was doing before but also get the benefit of credit card points.  I told them that either me or my wife shop at Target 4-5 times a week (which is true) because there is one so close to our house.  I wanted to continue to get the 5% discount while also earning credit card points.

…

The questions did not revolve around loading it with a credit card.  The moderator did not quiz us on this or probe into this feature BUT she seemed to be well aware of it.  She passed us some brochures that they either are using or plan to use about the card and they did not specifically mention the ability to reload with a credit card.  Someone pointed this out to her but she kind of ignored it and moved the discussion another direction.  She did not say that they were going to eliminate cc loads but she did not confirm its continued viability, either.  At one point she did bluntly ask, “If you could not re-load with a credit card, would you still keep the card?”  The … professionals all stated, “no.”  The others were not concerned with losing this feature.  In fact, the three non-professionals did not seem to even be aware that it could be loaded with a cc.

So there you have it: no real information was given about the future of credit card loads.  Unsurprisingly, they (Target and Amex) are aware of the ability to load by credit card. The good news is that maybe they’ll be swayed to keep the feature by focus group attendees who said they would ditch the card if credit card loads were no longer allowed.

Ultimately, Target will have to decide whether the benefits of allowing credit card loads outweigh their costs.  After all, Target must pay a credit card processing fee each time they accept a credit card for a reload.  If we assume that they average about 1.5% in fees (I’m assuming they’ve negotiated low fees), then their costs could average around $75 per month for REDbird customers who load the maximum of $5000 per month.  In return, they’ll almost certainly make many more sales.  I know that I’ve bought far more at Target in the past few months since picking up REDbird than I ever have before.  Yes, the automatic 5% discount helps, but there’s more to it than that: 1) I’m in the store anyway to do the reload so I might as well pickup other things I need; and 2) I feel compelled to reward Target with my business.  They’ve made REDbird incredibly easy to use and rewarding, so why not exchange the favor and shop more there?

Ultimately, my guess is that they’ll keep credit card reloads.  I expect that they like the idea of drawing more professionals into their stores and they certainly like the idea of people making more purchases at Target while they’re there.

Other questions

For those interested, the focus group attendee listed a number of questions that were asked:

o Tell me a little about yourself.

o How do you pay for items, cash/debit/credit?

o What comes to your mind when I say, “American Express”

o How often do you shop at Target?  Do you have other Target cards, credit or debit?

o How did you learn about the Prepaid card?

o Why did you get this card?

o How much did you put on the initial load?

o How do you use it?

o How do you re-load it and how easy is that process?

o Did you know you could use it outside of Target?

o Do you use the card?

o What features do you like/dislike?

o Anything confusing about the card?

o What problems did you have setting up the card?

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