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Holders of the Walmart MoneyCard issued by Green Dot Corp.’s bank subsidiary have resorted to social media in the past few days to complain of not being able to check account balances or use their cards to make purchases and withdraw money from ATMs.
The extent of the glitch is unclear, but it came as Green Dot prepares for what could be a contentious annual shareholder meeting next Monday. A dissident investment firm that owns 9.3% of Green Dot, Harvest Capital Strategies, is running a slate of three candidates for the Pasadena, Calif.-based company’s board of directors. Harvest Capital wants to oust Green Dot founder, chairman and chief executive Steven W. Streit, who is running for re-election to the board, as are two current directors.
The glitch began early this week. In a statement to the Los Angeles Times, Green Dot said the problems affected balance inquiries only. But consumer posts on Twitter and Facebook complained of not being able to make purchases or get cash at ATMs.
Green Dot is in the midst of transitioning from Total System Services Inc.’s (TSYS’s) processing system to MasterCard Inc.’s MasterCard PTS platform.
In an updated statement Thursday, Green Dot said that it and MasterCard completed the “third wave” of the PTS conversion last weekend. The conversion went according to plan, but then “certain systems at MasterCard PTS began to show latency (slowing),” causing some balance inquires over Green Dot’s Web sites or automated phone system to fail. That happened at times between Monday morning and Wednesday night, although customers still could retrieve balance information from the company’s mobile apps, Green Dot said.
Green Dot said it is investigating what it termed “a small number” of complaints on Tuesday that customers couldn’t spend funds. “Actual customer transactional data indicates that the vast majority of customers were able to use their cards during this period of time, including for ATM cash withdrawals, purchases, and the crediting of deposits,” the statement says.
The company said the latency issue was rectified Wednesday night and “all systems have been operating normally” since then. Green Dot did not reveal the number of cards affected, but said that fewer than 100 customers posted complaints over the three-day period on Green Dot’s social media channels.
A spokesperson for Wal-Mart Stores Inc., which sells the reloadable MoneyCard, did not respond to Digital Transactions News request for comment.
“My guess is it’s a minor thing, but the risk is damage to their reputation,” says Lawrence Berlin, a vice president at Chicago-based First Analysis Securities Corp. “The real risk is if people start shunning the cards. It is an inopportune moment.”
Prepaid card glitches can be especially troublesome for cardholders because many users are low-income consumers who don’t have bank accounts and rely heavily on reloadable cards to get cash and make purchases. Just last week, UniRush LLC, which offers the prepaid RushCard, agreed to pay a $19 million-plus settlement to compensate cardholders who couldn’t use their cards last year during a glitch that came during the RushCard’s switchover involving unidentified processors.
It also is unclear if the MoneyCard glitch will affect Green Dot’s proxy war since many stockholders undoubtedly have cast their votes by now. But in the war of words between Green Dot and San Francisco-based Harvest Capital in the run-up to the May 23 annual meeting, the investment firm on Thursday issued an “open letter” to Green Dot shareholders once again criticizing what it says is the company’s weak financial performance and poor execution. “The problem is leadership,” the letter says.
