Green Dot Corp. has struck a deal with U.S. Bancorp's MoneyPass Network giving its prepaid cardholders free access to the nationwide network of automated teller machines.
The deal was announced Wednesday but has been in effect for more than two months, and MoneyPass said early results provide further evidence that prepaid cards are driving up ATM transaction volume.
"Since this agreement was signed more than 60 days ago, transactions have doubled and tripled month over month," Douglas P. Miraglia, the president of MoneyPass, said in an interview.
"Prepaid cardholders are a very active segment of the debit card industry."
MoneyPass operates more than 17,000 ATMs in banks, credit unions and retail sites in all 50 states.
In November, Allpoint, the nation's largest surcharge-free ATM network, with 35,000 machines, said payroll cards that replace paychecks and debit cards that replace unemployment checks were boosting transactions at its ATMs.
At the time of Allpoint's announcement, Miraglia was cautious about the ability of prepaid cards to drive ATM volume, but he has since changed his mind. "There's no doubt about it, EBT cards, government cards, payroll cards and general-purpose prepaid cards are driving ATM transactions," he said. "They have grown the universe of debit cards."
Green Dot cardholders have long been able to withdraw funds from ATMs, but Steve Streit, the Monrovia, Calif., prepaid card company's chief executive, said the MoneyPass agreement significantly expands this capability. "It's really a big deal. We have been looking at this type of relationship for a long time," he said.
Green Dot opens 5 million prepaid card accounts annually, and less than 20% of fund withdrawals occur at ATMs, Streit said. Green Dot markets Visa Inc. and MasterCard Inc. prepaid cards.
The irony of the agreement is that it lets Green Dot prepaid cardholders withdraw cash from their accounts; most payments analysts view prepaid cards as an efficient cash substitute. "Prepaid cards are a financial-management tool," he said. "And there are times when a cardholder needs to get cash out of the holding tank."