For most in the prepaid space, Green Dot’s (NYSE: GDOT – Jun 14 2:14pm ET: 18.76 down -0.78; down -3.99%) announcement it had agreed to acquire the Walmart-branded prepaid card business from GE Capital Retail Bank (GE) was no surprise.
After all, GE and Green Dot took a big ego hit when Walmart (WMT) pushed the GE/Green Dot-issued Walmart prepaid Visa MoneyCard off its coveted exclusive perch on Walmart’s retail shelves to make room for the newly hatched, largely fee-free and feature-packed American Express Bluebird card.
No one knows how much Green Dot Bank will shell-out to acquire the deposits underlying the remaining Walmart Visa MoneyCard, or the consideration paid to GE, if any.
One thing’s for sure, someone probably took a big hit in the prepaid pocketbook on the program.
GDOT said in a filing with the Securities and Exchange Commission on Monday will get the deposits from GE at par and will issue future deposits on the cards. Pending regulatory approval, the deal is expected to close in the second half of 2013.
The filing did not disclose the dollar amount of the deposits, but some estimates put it in the $38 million dollar range – we’ll keep you posted. Walmart and GE, who both once owned (and may still) a big chunk of Green Dot agreed to the change.
Green Dot’s agreement to issue the Walmart Visa Money Cards runs through May 2015.
Green Dot had been service provider and effectively the program manager of the Walmart prepaid Visa cards, with GE Bank serving as the issuing bank since the cards were introduced with a ton of hoopla and fanfare in late 2006.
Walmart shoppers are far more interested in bananas than the Walmart Visa Money Card.
The cards were expected to revolutionize the way the under-banked shoppers who flock to Walmart manage their money. Unfortunately, the program never met expectations, with far fewer cards sold and reloaded than anticipated. Apparently shoppers are more interested in bananas.
Various published reports over the years place unit sales at about million Walmart Visa MoneyCard cards sold annually, or far less than one card a day sold per store across Walmart’s 4,663 locations in the U.S.
Rumors Walmart was growing weary of the missed sales forecasts also spread last year, flamed after a management shake-up at Walmart Financial Services, followed by the American Express Bluebird announcement. Missed forecasts are something the retailer holds little tolerance for, as anyone who has dealt with the retailer sorely knows.
The silver lining for Green Dot
Revenue on the remaining Walmart Visa Money Cards should rise slightly by making Green Dot the issuer, probably offset somewhat by the expense of notifying cardholders of the legal change.
Under the new arrangement, regulations imposed by the Durbin Amendment should exempt the cards from newly-imposed interchange-fee caps, which limits fees for prepaid cards issued by banks with more than $10 billion of assets. Utah-based Green Dot Bank holds $389 million of assets, while GE Capital Retail Bank, also based in Utah, has around $34 billion of assets.
In related news, GE announced it will continue to sell light bulbs, can openers, and coffee makers to Walmart.