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March 11, 2013

One of the themes that came away from last week's Prepaid Expo in Orlando was the re-emergence of credit building products for GPR cards. In fact, eCredable, ClearNow and WilliamPaid have brought new credit builders to market already. Moreover, representatives of other companies hinted that their divisions have their own concepts in development.

The failure of Pay Rent Build Credit has meant that any mention of the idea is

March 8, 2013

The emergence of GPR cards that facilitate prepaid cell phone top-ups speaks to a rule of innovation -  the adoption of anything beneficial to consumers flourishes when it simultaneously serves to bring profits to suppliers.

If you are the kind of person that can cash flow a month's payment on a cell

March 4, 2013

This is the moment in prepaid where companies are starting to distinguish their products by the depth of their functionality. Pricing is coming down everywhere, so even as maintenance and transaction fees become less and less, cards still cannot generate profile on cost alone. This is bad for any card that might have previously found a customer base because of low fees, given that they could not capture cash flows from loads or find customers from contracts with national retail chains. It is great

February 25, 2013

If you were to come across a Venn diagram made up of two kinds of financial products - one with sound financial products endorsed by

February 20, 2013

Will the cultures of NetSpend and TSYS find a fit? TSYS CEO says "We also believe that their culture and mission makes them a great fit for TSYS." But does a company where accents seem reminiscent of Augusta National really mix with a company based in Austin and led

February 23, 2011

Big banks have already said that they intend to enter the prepaid card market, but their success or failure is far from certain and could hinge on how they frame the purpose of the entire space.

January 31, 2011

The Bancorp Bank (TBBK) will issue some of the debit cards marketed and distributed by NetSpend under a new, multi-year agreement announced this morning.

While not an exclusive agreement, it is an important event that marks the first step in NetSpend's Bank Diversification Strategy.  NetSpend has been clear about its desire to find more bank partners. Last year, NetSpend's initial public offering was upset when the OTS issued a directive to MetaBank on the week that NetSpend had intended to

November 10, 2010

This week, Green Dot and NetSpend announced results for their third quarter earnings.

People have high expectations for companies with an established foothold in the prepaid card market. Every year, analytics firms publish estimates that predict more than 100 percent growth in reload volume, consumer accounts, and revenues. Every year, prepaid companies make reports that they have realized these gains.

Green Dot followed suit on Tuesday with some positive news. They more than satisfied investors when they reported thirty cents in EPS.

NetSpend (NTSP) did well, but not well enough. They paid off some of their debt with proceeds from their IPO. They managed to add 400,000 new accounts. Almost one in three cards is now direct deposit-enabled, compared to only 25.7 percent just one year ago. Gross dollar volume jumped by 33 percent year-over-year.

For most companies that would be a "door-blowing" report. Unfortunately, NetSpend has some high standards to meet. This is a company with a price-to-earnings ratio of 68. Compare that to the market as a whole, where the average P/E is more like 16.

Their shares dropped almost 8 percent before regaining a bit later in the day. Analysts though that they would report about $278 million in revenue, but NetSpend fell short.

Even if the numbers aren't perfect, they aren't bad, either. NetSpend still hasn't resolved some of its issues, though. They haven't resolved their situation with MetaBank. They've announced intentions to add three new bank partners. They have non-binding letters of intent with Bancorp Bank (TBBK) and Block Bank (HRB). The 10-q says that new relationships are at least 90 days away.

The lack of an answer with respect to new bank relationships is a problem, and it comes at the wrong time. NetSpend's 10-q contains this gem:

the most significant increases in the number of our active cards and our GDV typically occur in our first fiscal quarter as a result of consumers acquiring new cards and loading federal tax refunds onto their cards during tax season. In addition, the number of our active cards and our GDV typically increase from our third to fourth fiscal quarters as a result of increases in holiday employment and holiday-associated consumer spending.

That means that NetSpend is going to enter into the tax refund season without a long-term answer for their card issuer. None will replace

November 9, 2010

Following on an earnings report that exceeded everyone's expectations, Green Dot announced that it will offer another round of shares to the public.  A date for the IPO was not given.

Green Dot completed an IPO this summer. Its shares found a price of approximately $34 per share. Since then, Green Dot shares have been on a roll. Today they are trading at a range between $53 and $54.

The IPO will not dilute the value of existing shares. The company says it expects to generate about $100 million

October 15, 2010

The OTS directive to MetaBank sent the Iowa thrift's shares tumbling and then set off a series of subsequent events, from the suspension of an IPO to problems in the tax plans for several national tax companies, but all of it could come undone relatively quickly.

Here is the background: The OTS Directive broke existing plans at Santa Barbara Tax Products Group, at NetSpend, and at Jackson Hewitt. SBTPG had an agreement (from August 10th) that it would work with RALs and RACs from MetaBank.  SBTPG intends to facilitate RALs in the upcoming tax year. NetSpend made MetaBank its preferred bank partner. Jackson Hewitt needs more RAL money, and it needs it to be wrapped up in five weeks.

This announcement poses a significant regulatory problem for MetaBank. It comes at absolutely the wrong time for

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