It has been a chilly Spring in the US, but one bird is chirping. American Express and Walmart said on Tuesday that their Bluebird venture for financial services now has federal deposit insurance. The two teamed up last October to offer prepaid debit cards and cheque services targeting low-income households that are frustrated with the fees on traditional bank accounts or not using them at all.

The FDIC insurance opens up areas of growth for the fledgling service - people who were uneasy or limited without the federal backing. Many of Walmart’s shoppers are military personnel, veterans and Social Security recipients. Direct deposit of government cheques can only be done with FDIC insured accounts. The insurance also puts Bluebird on equal footing with traditional banks as well as Netspend and Green Dot which offer FDIC-insurance on Visa and MasterCard-branded pre-paid cards. By the end of January, Bluebird had more than 575,000 accounts with $275m of funds.

Walmart unsuccessfully tried to become a bank several years ago. For Bluebird, Amex issues the cards and Walmart distributes them. The FDIC insurance kicks in because Amex uses accounts at Wells Fargo, an FDIC member bank, for Bluebird’s registered customers. Revenue comes from merchant transaction fees (and perhaps Walmart can cut its own transaction costs – the financial terms with Amex were never disclosed), and a few other fees. Bluebird does not charge overdraft, monthly, activation or minimum amount fees.