Prepaid provider NetSpend (NTSP) is muscling in on rival Green Dot (GDOT).

With some retailers looking to end their exclusive partnerships with Green Dot and put more competitors' products on their shelves, NetSpend is projecting that the number of stores selling its cards will triple by the end of the year, to 25,000.

That message of growth, delivered in a second-quarter earnings call late Thursday, came in stark contrast to the one delivered by Green Dot a week earlier, when it revealed that its exclusive partnerships could soon end and lowered its earnings guidance for the rest of the year.

NetSpend's income rose to $10.2 million from $7.6 million a year earlier, as more customers signed up for direct deposit, a higher-revenue segment for the company. The company reported that 43% of its active cards now have direct deposit, up from 37% a year earlier. The number of active cards grew to 2.2 million from 2.1 million last year. The company also continued to expand its presence in stores like 7-Eleven, and announced a new deal with Family Dollar in May.

More notably, the company raised its revenue forecast for the year by about 2%, to between $347 million and $353 million, due to the anticipated expansion into more retail outlets.

NetSpend has previously focused its sales at non-retail locations like check cashers and money transfer stores, and the opportunity to grow its retail presence opens up a new frontier, analysts say.

"Only 6% of business is coming from retail, but that's up from almost nothing from a year ago," says Gil Luria, an analyst with Wedbush Securities.

"They've been able to accelerate growth based on their entry into the retail channels," he adds.

The company's partnership with PayPal, announced late last year, has helped open that door, says Luria.

"It gave them what they didn't have before, which was a brand that retailers want to put on the shelf," he says.

Dan Henry, chief executive at NetSpend, underscored on a conference call with analysts that he saw increasing interest among retailers to diversify their prepaid card selection as well.

"A major retailer wants to maximize sales per square foot. They carry multiple brands of every product they sell," he said.

In an interview later on Thursday, Henry added that the company seeks to differentiate itself by pursuing a variety of strategies to win customer loyalty.

"With Green Dot going public before us, the mindset by analysts is this is a card distributed through a retailer," said Henry, noting that NetSpend is available through a variety of other channels like check cashers.

"One thing we have learned is there is no one magic silver bullet to [get consumers to] commit," he added. "It's not price, it's not a marketing gimmick, it's not a giveaway. It's a combination of a properly priced product, great word of mouth and product feature functionality."

Still, while analysts say that NetSpend is likely to see a short-term boost from its growing retail presence, some caution that the gains may ultimately be limited.

It's a "finite opportunity," says Wedbush's Luria, in part because it's unclear whether Wal-Mart (WMT), a major partner for Green Dot, is going to be offering new cards on its shelves.

Luria estimates that just one quarter of Green Dot's retail revenue comes from stores other than Wal-Mart, such as Rite Aid, Walgreens and Kmart, which amounts to roughly $130 to $150 million of annualized revenue.

"By opening that to competition, NetSpend can get maybe half of that to a third of that," says Luria.

He says that another two thirds of Green Dot's business comes from issuing Wal-Mart's own MoneyCard, not from Green Dot's products on the shelves.

"That's going to be challenge for NetSpend, is putting cards on Wal-Mart's shelves and longer term to get the deal to issue the Wal-Mart money card," says Luria.

Moreover, some analysts argue that down the line, both companies will still need to deal with increased competition from other rivals like Western Union (WU) and a growing number of banks offering prepaid products.

"Long term it's really hard to argue that NetSpend has a different business case ahead of it that allows them to be immune from some of the forces affecting Green Dot," says Thomas McCrohan, an analyst at Janney Capital Markets. "Distribution — that's how the players are differentiated. The product is the same. That's not sustainable."

"It's almost like Coke and Pepsi had different results because the market factors are different," he adds. "Both [prepaid providers] are facing price erosion, and the economics are still challenged" in the long run due to competition.

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