Digital Transactions Authoritative, insightful and timely information for payments professionals
Prepaid card program manager NetSpend Holdings Inc. beefed up its retail distribution channels through a new agreement announced on Wednesday with leading convenience-store chain 7-Eleven Inc. The news came just a day after NetSpend rival Green Dot Corp. revealed that it bought assets from eCommLink Inc. that will advance its do-it-yourself strategy.
NetSpend’s new agreement adds more than 5,000 U.S. franchised and company-owned 7-Eleven stores where customers can buy NetSpend’s Visa-branded prepaid cards. The deal comes in the wake of a pact the companies announced last October that enabled NetSpend cardholders to reload their cards at 7-Eleven stores.
“This is our single largest retail distribution to date,” a spokesperson for Austin, Texas-based NetSpend tells Digital Transactions News, adding that 7-Eleven actually began selling NetSpend cards early this month.
The agreement fills a hole in NetSpend’s distribution network, that being a lack of major national retailers. Its biggest single retail partner had been the Speedway gas station/convenience-store chain with 1,300 locations. NetSpend, whose newer partners also include the Blackhawk Network prepaid card subsidiary of grocery-store chain Safeway Inc., now has 15,000 retail outlets. Its largest distribution partner is the Ace Cash Express Inc. check-cashing chain, whose customers generate more than one-third of NetSpend’s revenues.
“They’ve been heavily concentrated in the check-casher channel; they needed to expand that diversification,” says prepaid card researcher Ben Jackson, a senior analyst at Maynard, Mass.-based Mercator Advisory Group Inc.
Dallas-based 7-Eleven also offers prepaid cards from Green Dot and The Western Union Co. “7-Eleven wants to offer customers several prepaid debit options for their convenience,” a spokesperson tells Digital Transactions News by e-mail.
The NetSpend spokesperson also says more details will be coming soon about a pact the company announced in October with PayPal Inc. The two firms are marketing a PayPal-branded general-purpose reloadable prepaid card managed by NetSpend.
Monrovia, Calif.-based Green Dot, meanwhile, on Tuesday said it spent $2.5 million in cash for certain processing and hardware assets of eCommLink, a small prepaid services company based in Las Vegas. Green Dot said in a news release that the assets would allow it to bring in-house processing and payment-network connectivity functions now done for it by Columbus, Ga.-based processor Total System Services Inc. (TSYS). Green Dot recently renewed its contract with TSYS for two years, but over that time will move the processing functions to its new system built on the eCommLink assets.
Green Dot, which manages prepaid cards for a number of national retailers, including Wal-Mart Stores Inc.’s Walmart MoneyCard, in November received regulatory approval to buy Utah-based Bonneville Bancorp, a one-bank holding company. Green Dot currently issues its cards through bank partners but is expected to take over issuance on most of them itself through Bonneville Bank, says Jackson. General Electric Co.’s GE Capital Retail Bank will continue to issue the Walmart MoneyCard.
Green Dot chief financial officer John Keatley said that about one-third of Green Dot’s processing expenses consist of fees paid to processors such as TSYS and to Synovus Bank, one of the company’s bank partners. “We expect that integrating our recent acquisitions of Bonneville Bancorp and the assets of ECL will enable us to implement our vertical-integration strategy over the next two years as we build out our own in-house card issuing and processing capabilities,” Keatley said in the release.
Green Dot said it would divulge more details about its integration strategy at its Jan. 26 fourth-quarter earnings conference call.
