- Texas
NetSpend Holdings Inc.'s first-quarter revenue rose 16% from a year earlier, to $80.8 million, as the activity on its prepaid debit cards increased and more of its customers began using direct deposit.
May 5 -
The Monrovia, Calif., company has signed Rite Aid Corp. as its first client for a payroll card program the drugstore chain plans to offer its employees.
April 30 - Texas
After an issuer's short-term loan program was shut down, NetSpend, which offered the program, said there is still room for some form of lending product among its offerings.
November 10 -
Investors drove the price of Green Dot Corp.'s shares up as much than 24% Thursday in the prepaid card company's first day of trading on the New York Stock Exchange.
July 22
The gloves have come off in prepaid as card marketers are targeting underbanked consumers in each other's markets.
Green Dot Corp., NetSpend Holdings Inc. and other companies have largely avoided one another in the quest for customers, but a new partnership between NetSpend and entertainment conglomerate BET Network changes the dynamic.
The two companies said Thursday they plan to develop a co-branded prepaid card aimed at black consumers. The move is a direct assault on media icon Russell Simmons' well-known prepaid RushCard, targeted at the same demographic, some analysts said.
"With the BET agreement, I think that the brawl in prepaid has begun," Ben Jackson, a senior analyst in the prepaid advisory service at Mercator Advisory Group in Maynard, Mass., said. "Before this I think a lot of the … prepaid card providers were sort of operating in separate spaces. They were adjacent but they weren't necessarily going head to head for anything other than the nebulous unbanked market or underserved market. With NetSpend saying, 'OK, now we're going to partner with BET,' now they're going right in and going after the RushCard market."
Other companies are also going after specific ethnic groups.
Early this year the payments services company PreCash Inc. announced the Reach Visa prepaid card targeted at blacks with syndicated radio host Tom Joyner as the product's spokesman. Univision Communications Inc. last year launched a prepaid debit card targeted at Hispanics with MasterCard Inc.
Green Dot, NetSpend and other third-party program managers do not issue prepaid cards. Rather, they manage customer relationships and handle marketing of their cards, which are issued by partner banks.
Prepaid executives say there is more than enough room for multiple players, with an estimated 60 million unbanked and underbanked consumers in the U.S. But Green Dot and NetSpend, two of the best-known names in the market, have been under pressure by analysts and investors in recent months to expand after having completed successful initial public offerings last year.
NetSpend said Thursday that its number of active cards, or those that have been used to make a transaction in the previous 90 days, was 2.3 million as of March 31, up from 2.1 million a year earlier.
NetSpend's first-quarter revenue rose 16%, to $80.8 million, and its net income rose 68%, to $7.8 million.
Because it missed analysts' estimates of adjusted earnings and lowered its forecast for the year due to costs related to the partnership with BET, NetSpend's share price fell 14% Friday, to $9.22.
NetSpend does not intend to use its deal with BET — a unit of Viacom Inc. — to take on specific competitors, Dan Henry, the chief executive of the Austin, Texas, prepaid marketer, said in an interview on Friday. Rather, the goal is to continue expanding distribution.
"It's not so much about getting into RushCard's space at all," Henry said. "It's doing what we do, which is partnering with organizations that have got reliability, trust and reach into our target market."
Of the 9.1 million U.S. households that do not have a checking or savings account, 36.9% are black, according to a 2009 study by the Federal Deposit Insurance Corp.
NetSpend declined to discuss its financial arrangements with BET. The companies plan to release their product near the end of this year.
A spokesman for UniRush LLC, the company that Simmons founded in 2003 to market the RushCard, did not comment on NetSpend's plans.
The RushCard "serves about 2.5 million members, and more than $1 billion is spent annually" on the cards, the spokesman said in an email.
Gil Luria, a senior vice president with Wedbush Securities LLC, said it is too soon to predict the impact of NetSpend's partnership with BET. All prepaid companies are looking for deals to expand their reach, he said.
"They're growing very rapidly, and they're finding new channels to sell through, and the category's expanding," Luria said.
NetSpend also announced a partnership with Blackhawk Network Inc., a subsidiary of Safeway Inc. that sets up gift and prepaid card displays in retailers. The deal will help expand brand awareness among customers, experts said.
"Prepaid is a volume business," Mercator's Jackson said. "The only way you make money is, you've got to have a lot of cards out there."
