Green Dot Corp. faces little financial risk from proposed legislation that would ban certain fees on prepaid cards, according to a stock analyst.
The Monrovia, Calif.-based prepaid card company’s shares rose as much as 6.5% on Dec. 29, the same day J.P. Morgan analyst Tien-tsin Huang reiterated his overweight rating of the company.
Sen. Robert Menendez, D-N.J., introduced a bill on Dec. 17 that would prohibit companies from charging fees for card inactivity, balance inquiries, overdrafts and other activities, and that would require disclosure of fees that a customer can be charged.
Green Dot's “fees are transparent, and we continue to believe the company’s fee strategy is aligned with the regulator's intent," Huang wrote in a Dec. 29 research note.
Shares of Green Dot, which sells general purpose reloadable cards through retailers’ stores and online and operates Wal-Mart Stores Inc.’s prepaid MoneyCard program, were up 5.7% at $53.50 as of about 2:30 p.m. EST.
The Prepaid Card Consumer Protection Act of 2010 is currently in the Senate Committee on Banking, Housing, and Urban Affairs.
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