Thursday, June 13, 2013
Green Dot takes stock
Media reports surfaced that Green Dot Corp. acquired the general-purpose, reloadable prepaid card portfolio of GE Capital Bank, which issues the Wal-Mart MoneyCard managed by Green Dot. The companies will reportedly close the deal in the second half of 2013. Financial terms of the acquisition were not disclosed.
In a June 12, 2013, investor presentation, Green Dot noted that significant pressures have come to bear on its business model, including:
- The national rollout of BlueBird, the alternative financial services platform that teams American Express Co. with Wal-Mart Stores Inc.
- The cards of multiple competitors now being stocked at nearly all of the store locations of Green Dot's retail partners
- Big banks entry into the prepaid card market
Green Dot also listed other pressures that arise from increased regulatory controls on the prepaid card industry. Like the industry in general, Green Dot noted it has implemented multi-factor authentication and enhanced portfolio monitoring, which has resulted in about a 10 percent decline in approval rates year-over-year; the fallout from that metric is that reloads, active cards and revenue are going down. However, Green Dot remains the leading U.S. prepaid card company. Since its initial public offering in July 2010, Green Dot reported revenue growth of $200 million and the near doubling of its gross dollar volume, and the volume on its reload network grew by almost 20 million transactions.
In comparison to its next largest competitor, NetSpend Holdings Inc. ( in the process of being acquired by Total System Services Inc.), Green Dot appears to have a significant advantage. Green Dot has 4.5 million active cards to NetSpend's 3.2 million; $566 million in revenues compared to NetSpend's $377 million; and more than four times the cash/check load volume of NetSpend.
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