Green Dot announced Thursday that its revenue and net income rose in the third quarter as the firm found ways to earn more money from its base of 4.6 million active prepaid cards.
The Pasadena, Calif., prepaid card pioneer has seen only gradual increases in customers' use of its cards over the last year. Purchase volume was $3.35 billion in the third quarter, a 2.7% increase from the same period a year earlier.
But Green Dot's revenue climbed more substantially in the quarter. Based on generally accepted accounting principles, operating revenue totaled $144.7 million during the period, a 6% increase from the third quarter of last year.
The company's net income rose more sharply to $13.9 million, based on GAAP, up from $6.1 million a year earlier.
"Our solid third-quarter results were driven by the continued growth in active cards along with increasing revenue derived from those active cards," Green Dot Chief Executive Officer Steve Streit said in a news release.
Green Dot's announcement that it is getting more revenue from each active card is significant because the arrival of competitors such as American Express has spurred concern among investors that margins across the prepaid industry will fall.
Over the last year, Green Dot has started selling its prepaid cards in check cashing and payday loan stores, which may be contributing to the higher margins on each card. Green Dot said Thursday that it added more than 400 check-cashing stores in the third quarter, and began selling its products in approximately 1,500 Ace Cash Express locations in October.
Green Dot made two major announcements during the third quarter. In September, Wal-Mart announced that it will begin offering GoBank, a checking account product that Green Dot developed for mobile phones, in its stores.
Also during the quarter, Green Dot purchased Santa Barbara Tax Products group, which sells tax refund processing services through tax preparers, for about $320 million.