Digital Transactions Authoritative, insightful and timely information for payments professionals
Green Dot Corp. announced a number of a new products Wednesday and said it was getting into lending in order to generate new revenues and expand beyond its prepaid card base.
Under pressure from a large investor to boost its bottom line and flagging stock price, Pasadena, Calif.-based Green Dot reported with its fourth-quarter 2015 financials that it has launched a new Walmart MoneyCard in addition to what it calls its Green Dot Everyday Visa for sale at Wal-Mart Stores Inc., Green Dot’s biggest retail partner.
In the pipeline for Green Dot’s other retail partners are the Green Dot Everyday Prepaid Card and the Green Dot 5% Cash Back Visa Debit Card. “The company expects that by the end of April, substantially all of Green Dot’s top-selling retail chains nationwide will be selling these new products, which feature superior features for customers and superior unit economics for Green Dot compared to all previous Green Dot card offerings,” Green Dot said in a statement.
April also should see the introduction of a new, more secure MoneyPak reload product to replace the one Green Dot discontinued a year ago because, despite its popularity, it was a favorite tool of fraudsters.
Meanwhile, the company reported that its Green Dot Bank subsidiary has received approval from bank regulators to issue a secured credit card. Another initiative in its early stages is Green Dot Money, an online service through which Green Dot hopes to generate placement fees by connecting lenders with potential unsecured borrowers who use Green Dot prepaid cards.
Still another new line of business for Green Dot is the TPG tax-refund processing service, but that one generates most of its revenues in the first half of the year.
Chairman and chief executive Steve Streit said in a conference call that Green Dot aims to deepen its ties with the half of all all U.S. households that have annual incomes of less than $50,000. “Green Dot isn’t a prepaid card marketer nor a prepaid card program manager,” he said. “Green Dot is big, growing, ubiquitously distributed and increasingly famous fin-tech powered branchless bank.”
The loss of MoneyPak, the transition from older products to newer ones, and higher commissions paid to Wal-Mart took a bite out of some of Green Dot’s key operating and financial metrics. Fourth-quarter cash transfers declined 22.3% year over year to 9.71 million, and the active card count slipped 4.7% to 4.5 million. But gross dollar volume increased 5.9% to $5.44 billion and purchase volume jumped 9% to $3.87 billion.
Green Dot reported a $5.9 million fourth-quarter loss compared with a $785,000 loss a year earlier, on revenues of $150.9 million, up 0.2% from $150.6 million. For all of 2015, the company had net income of $37.3 million, down 1.4% from $37.9 million in 2014, on revenues of $694.7 million, up 15.5% from $601.6 million.
Green Dot hopes to cut operating expenses as it transitions from its old processing platform from Total System Services Inc. (TSYS) to MasterCard Inc.’s PTS platform. Some 33 million customer records have been converted, with another 60 million to go in 2016. Also on the technology front, Green Dot is plugging its prepaid cards into the technology platform called GoBank PTP in order to increase operational efficiencies and offer more features.
On the matter of the discontented shareholder, the Harvest Capital Strategies LLC investment fund that has called for firing Streit and making changes on the company’s board of directors, Streit said Green Dot will expand its board and ask for Harvest’s input on who should be appointed. But he also said he’ll ask Green Dot’s top 10 shareholders for their input, too, and that the company plans to stick to its growth plan.
“I suppose the job of the activist is to say and write sensational things to solicit a reaction, and I actually don’t take it personally,” he said.
