Green Dot Corp.’s decision to expand its prepaid debit card offerings at Wal-Mart Stores Inc. might be a sign the prepaid market is starting to see the limits of targeting unbanked and underbanked consumers, notes one analyst.
Wal-Mart’s MoneyCard program now will include a Visa-branded Gold card, a MasterCard-branded Family Edition card and a MasterCard Bill Pay card. Green Dot deigned the cards to better serve specific segments of Wal-Mart’s customer base, according to a press release.
Green Dot expects the expanded MoneyCard category will contribute to new card activations, Steve Streit, Green Dot chairman and CEO, told analysts Oct. 27 during a conference call to announce the company’s earnings.
Consumers activated about 1.96 million of Green Dot’s general-purpose reloadable debit cards in the third quarter. That represents an increase of 33%, or 490,000, from the previous year (
The Gold card has new packaging, and the Family Edition MoneyCard comes with an additional card parents can give to a family member, Green Dot says. Both the purchase and reload fee for the cards is $3. An ATM withdrawal costs $2.
GE Capital Retail Bank Co. Ltd. issues the cards.
Green Dot, which traditionally has marketed its products to the financially underserved, appears to be breaking out of that segment to show consumers they can use prepaid for a variety of purposes, notes Ben Jackson, a senior analyst for prepaid advisory service at Mercator Advisory Group.
Some 60 million U.S. consumers are underbanked and unbanked, he says. “That still leaves another 300 million consumers, and this might be Green Dot’s way to try and not ignore them,” he says.
Targeting more-affluent consumers with prepaid is nothing new. American Express Co. does so with a cobranded card with the American Automobile Association, Jackson notes.
“There is a recognition [by prepaid card providers] that everyday people also need to be careful with their money,” he says.
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