U.S. Bancorp (USB) is beefing up its prepaid card business.
The $352 billion-asset company's U.S. Bank subsidiary said Tuesday it would buy FSV Payment Systems, a prepaid card program manager and processor based in Jacksonville, Fla.
Financial terms of the deal, which is expected to close in December, were not disclosed.
FSV, which manages and processes payroll, gift and other card programs on behalf of companies in varied industries, would become part of U.S. Bank's Elan Financial Services unit. In September, McDonald's USA selected FSV to provide payroll card services for the chain's company-owned restaurants in the U.S.
Elan provides prepaid, ATM and credit card programs on behalf of roughly 3,000 companies, according to U.S. Bank.
"Their strong suit is in the payroll card, which we have, but this greatly expands our payroll product," Teri Charest, a U.S. Bank spokeswoman, told American Banker. "This would basically double our prepaid program."
U.S. Bank introduced its first prepaid card roughly a dozen years ago. Since then, the Minneapolis-based bank has expanded its prepaid business to include a reloadable Visa debit card, a Visa gift card and a prepaid card for teens. The bank also offers a Visa- and MasterCard-branded payroll card, as well as prepaid cards for government and corporate rewards programs.
The deal comes amid rapid growth in the prepaid market, which some analysts expected to double in size by 2016. There were six billion prepaid card transactions in 2009, according to a study published in August by the Federal Reserve Bank of Philadelphia.
Most of the nation's biggest banks are now marketing prepaid cards. JPMorgan Chase (JPM) said Monday it plans to offer instantly issued debit cards in 2,000 branches primarily in New York, Chicago and Los Angeles by the end of the year.