Meta Financial Group Inc. could turn its recent regulatory troubles into a positive as it seeks new business opportunities in prepaid debit card issuing, an analyst notes.
Bank Freedom, a wholly owned subsidiary of Prepaid Card Holdings Inc., on March 28 officially severed ties with Meta as a card-issuing partner in light of the bank’s problems with the Office of Thrift Supervision, Bank Freedom CEO Bruce Berman tells PaymentsSource.
The agency in October ordered Meta to shut down a small-dollar, high-interest loan program (
Losing Bank Freedom should not be viewed as a setback for Meta, which has managed to retain such large clients as Account Now Inc. and Western Union Co., says Phil Philliou, a partner with the consulting firm Philliou Selwanes Partners LLC.
“The big accounts have stayed with them through what had to have been the most stressful period of time for them,” Philliou says.
Meta should use its problems as a rallying point should prospective partners seek to do business with the Storm Lake, Iowa-based based financial institution, he says.
“They are probably a lot stronger after going what they’ve gone through with the regulators, and that experience for program managers is invaluable,” Philliou says. “A lot of people can talk the talk, but Meta has the scars and the experience of having gone through this, and I think that’s useful and valuable.”
Bank Freedom earlier this year notified Meta that it would seek a new issuing partner. Meta, in turn, notified Bank Freedom last week that it would not renew a contract that expires in November.
A Meta spokesperson tells PaymentsSource sister publication American Banker the decision not to renew Bank Freedom’s contract was an “ordinary course of business decision.”
Bank Freedom had been seeking a new issuing partner for “some time,” Berman says. The company is not revealing the new issuer as part of a confidentiality agreement, he adds.
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