This is crazy on so many levels.

First, the UIGEA provisions relating to financial services companies (such as NetSpend) did not go into effect until June 1, 2010. Banks and other payment processors were originally given until December 1, 2009, to implement regulations under the Unlawful Internet Gambling Enforcement Act, but were given a 6 month reprieve thanks to an extension passed late in 2009.

The plaintiff claims NetSpend is negligent for processing transactions in August and September 2009, before the financial services rules were in effect. (Unless we are missing something here — payments lawyers, feel free to contact us with better information if we are).

But perhaps more disturbing is that the guy lost a boat-load of money engaging in (apparently) illegal gambling, and now is asking for NetSpend (and, effectively) other NetSpend customers to share in his loss.

It also turns out that the same guy sued at least one other company for a similar reason (he sued TD Bank on August 26, seeking damages of $80,000 — he lost over $15,000 from his TD Bank account).

You can download a copy of the complaint against NetSpend here: Gambler Sues NetSpend

Gambler Sues Netspend

Disgruntled Gambler Sues NetSpend, Claims UIGEA Violation is a post from: Prepaid Debit Cards | Teen Debit Card | Prepaid Gift Cards

Here are 15 of the top (free) resources for information about prepaid debit cards, including information about how prepaid cards work, the demographic of prepaid card users, and how to size the market. Some of these reports are from the early days of the prepaid card market and are provided as background information. Most of the other reports are very recent, and include demographic and market information that can be very helpful in understanding the prepaid debit card marketplace in 2010 and beyond.

We are always looking for more research in prepaid. If you have additional resources you’d like to bring to our attention, please contact us. We’ll be happy to add them to the list.

Prepaid Research From Government Organizations

The recent (December, 2009) FDIC National Survey of Unbanked and Underbanked Households which found that “An estimated 7.7 percent of U.S. households, approximately 9 million, are unbanked” and “an estimated 17.9 percent of U.S. households, roughly 21 million, are underbanked”. The FDIC also published its data (in an excellent, interactive format) online at EconomicInclusion.gov. The report is one of the most comprehensive available. In January 2009, the Federal Deposit Insurance Corporation (FDIC) sponsored a special supplement to the U.S. Census Bureau’s Current Population Survey (CPS) to collect national, state, and metropolitan statistical area (MSA) data on the number of U.S. households that are unbanked and underbanked, their demographic characteristics, and their reasons for being unbanked and underbanked. Almost 47,000 households participated in the survey.

Our second recommended report is a short and sweet one-pager. But it quickly shows how the underbanked population is split along demographic lines, including by income, race, and education. Do yourself a favor and take a minute to scan this report. The City of New York published the results of a 2009 Study showing the concentration of underbanked households in certain eighborhoods. The results are quite striking: Citywide Financial Services Study. The Study found that “In New York City, more than 13 percent of households have no bank account”, and that “New York City’s unbanked households are highly concentrated in certain neighborhoods.”

Our third recommended report was published by the FDIC and provides an overview of “Bank on San Francisco” (part of the national “Bank On” initiative) titled From Mattress Money to Checking Accounts: A Profile of Bank on San Francisco. In the report, the size of the market is described as: “Nationally, as many as 22 million people lack basic checking and savings accounts, and are generally referred to as the ‘unbanked’ or ‘underbanked’”.

One of the original, and still quite good, publications about the debit card industry was produced by the FFIEC a number of years ago. It is still relevant, and an excellent resources about debit cards and the debit card industry. A Guide to the Debit and ATM Card Industry

Publications by the Center for Financial Services Innovation (CFSI)

The Center for Financial Services Innovation consistently publishes excellent reports and analyses about financial products, including prepaid debit cards. The CFSI is the nation’s leading authority on financial services for underbanked consumers. The CFSI believes “that addressing the needs of underbanked consumers as a market will deliver broad, long-term change throughout the financial services landscape by creating mutual benefit for both the underbanked and the companies serving them.” The following are some of our favorite CFSI reports:

Building a Better Bank Account, a relatively early, yet still extremely relevant, article describing how banks can better service the underbanked population using stored value cards or prepaid cards. This is an excellent introduction to the prepaid card market, and was quite prescient in suggesting that “Refillable, branded SVCs would function like a debit card, allowing customers to do almost anything they could do with a credit card: make purchases over the Internet, buy groceries, pay for car repairs. Customers could receive direct deposits,
withdraw funds from ATM machines, conduct point-of-sale debit purchases from the local grocery store, pay bills online, and buy money orders from the post office.”

In 2009, the CFSI partnered with paybefore.com to understand current trends in general purpose reloadable (GPR) prepaid cards, and conducted an Internet poll of industry executives. CFSI then interviewed 18 industry leaders across the spectrum of participants in the prepaid value chain. All interviews were conducted with senior level managers, generally the person responsible for the prepaid card business within a large company or the chief executive officer of a smaller company. The results of the study are available in The Industry Forecast for Prepaid Cards, 2009.

Not content to listen to industry experts, the CFSI asked actual prepaid card users how they user their prepaid cards and whether the cards help them manage their money and start down a path toward financial prosperity. The results are reported in A Tool for Getting by or Getting Ahead? Consumers’ Views on Prepaid Cards. The study reports: “Our findings give evidence about the potential of prepaid cards to enhance families’ financial well-being. We present new data about prepaid card users’ day-to-day financial lives, including the nature and amount of income sources, family expenses, and use of different financial services.”

In the fall of 2009, the CFSI took a look at underbanked consumer preferences between checking accounts and prepaid cards. The results are published in Prepaid Cards vs. Checking Accounts inBrief

Publications by the Network Branded Prepaid Card Association (NBPCA)

The Network Branded Prepaid Card Association (NBPCA) is an industry group that promotes (not surprisingly) network branded prepaid cards (including cards having network logos, such as Visa, MasterCard, American Express and Discover). The NBPCA’s stated mission is “active on behalf of its members to enhance the environment for the success of network branded prepaid cards.” The association produces a number of papers, studies and reports, some of which are an excellent resource for those trying to understand the market. Four of our favorite reports include:

The 2009 Payment Systems Evolution and Branded Prepaid Card Analysis by Bretton Woods

The 2008 Consumer Branded Gift Card Users Survey

Tips for Having a Great Experience with Network Branded Prepaid Cards

The Prepaid Advantage

Other Prepaid Card Research Publications

Some of the best publications and studies about prepaid debit cards have come from non-profit research groups. Here are four of our favorites:

A publication from the National Community Investment Fund (NCIF) which was prepared to “help move the field forward in showing how banks might use prepaid cards to earn new business, meet client needs and bring the underserved into the financial mainstream”. This is an excellent report, and should be required reading for any analysts, investors or financial services professionals covering the prepaid card space. The report is titled Demystifying Prepaid Cards: An Opportunity for the Community Development Banking Institution Sector.

A study by the PEW Charitable Trust (the PEW Health Group) which takes a look at “how low-income Los Angeles households manage the money they earn, titled Unbanked by Choice. The report is one of the most comprehensive studies of the unbanked available, and focuses on certain neighborhoods in Los Angeles. Some of the key findings include: “Almost two-thirds of unbanked individuals in our survey (63%) have never had a bank account. Thus, they constitute an untapped market for banks. More than one-fifth (22%) of the Unbanked who have had accounts have voluntarily left the mainstream banking system, indicating a high level of customer dissatisfaction. Some of the Unbanked (9%) were expelled from their banks and are now unable to get an account.”

A paper published in January 2008 by the Brookings Institution titled: Banking On Wealth: America’s New Retail Banking Infrastructure and Its Wealth-Building Potential. The paper discusses “The $100 billion size of the high-cost non-bank basic financial services industry, including check cashers, payday lenders, and pawnshops, points to the high demand for basic financial services among low- and moderate-income customers. Alternative products sold by banks could meet those consumer needs, while also creating an opportunity for households to convert their current spending on high-cost services into savings and even wealth.”

The Consumers Union (the non profit publisher of Consumer Reports), working in conjunction with the Consumer Federation of America and the National Consumer Law Center, published Prepaid Cards: Second-Tier Bank Account Substitutes in August 2009. The report took a critical view of the prepaid card industry, and provided (at the time) one of the most comprehensive analyses of prepaid card fees available. The report shows the wide range of fees that some prepaid debit cards charge. The report states that: “consumers face dangers and traps with prepaid cards, which are becoming the foundation of a second-tier banking system that shadows the traditional banking system.”

15 Must Read Prepaid Debit Card Research Reports is a post from: Prepaid Debit Cards | Teen Debit Card | Prepaid Gift Cards

In the conference call (which is available here), Steven Streit, the President and CEO of Green Dot, and one of the founders of the prepaid debit industry, spends quite a bit of time giving an overview of the prepaid industry as well as an introduction to Green Dot.

The call started with a brief introduction to Green Dot’s operations, strategy and culture, and their mission: to provide millions of Americans with access to convenient and low cost bank accounts and banking products.

Streit discussed how Green Dot had to make some tough decisions to achieve their objective of providing low cost products that served
customer needs. The decisions, ultimately, resulted in increased account acquisitions and increased profits and margins.

Streit further discussed the key areas that drive Green Dot’s revenue (each managed by separate teams within Green Dot):

• Green Dot branded products (including the sale of Green Dot products at retail stores, including the new Circle K relationship)
• Private label products, or cards that are branded in the name of the private label partner, such as the Wal-Mart Moneycard)
• Green Dot Interactive, a relatively new group formed to promote the sale and use of Green Dot cards online, including the Green Dot MasterCard and Green Dot Visa Card available on the Internet)
• The Green Dot Load Network (the nation’s largest prepaid card reload network, which allows other prepaid cards to be loaded by cash using MoneyPaks purchased at a wide variety of retailers).

A number of growth drivers for the prepaid industry in general and Green Dot in particular were also discussed, including:

• Secular trends causing consumers to migrate to debit, including the tight credit markets and increasingly expensive bank fees.
• Increasing and expanding retail relationships, including at Wal-Mart (which accounted for 64% of GDOT revenue in Q2) and the new Circle K relationship.
• Formation of the Green Dot Interactive Unit, to market and distribute Green Dot cards through online channels. The Interactive Unit was just an idea 18 months ago, but is now an active contributor to the GDOT card base.
• New product development with a focus on increasing customer acquisition and retaining customers.
• Acquisitions and strategic investments, including the purchase of Bonneville Bancorp and it’s subsidiary for $15.7M dollars (which is expected to close in Q4 2010, pending regulatory approvals). The Bonneville Bancorp acquisition is intended to increase GDOT’s efficiency in launching new products, reduce risk, reduce sponsorship and service fees, and to service customers better through a more vertically integrated platform.

During the Q&A session, several items of interest were discussed, including:

• The seasonal affect that tax season has on active card numbers. In particular, Green Dot’s relationship with TurboTax accounted for approximately 5% of active cards during Q2 (and more than that in Q1). The numbers drop off in Q3 (with around 2% of active cards in June 2010) as cardholders take their tax refunds off the cards.
• Cardholder retention and profitability. Streit claims that Green Dot is profitable from the time a customer buys a Green Dot card off a retailer’s shelf. However, cardholder retention is a segmented business. For retail sales, many cardholders purchase a prepaid card for a single or specific use (e.g., for a trip, to make an online purchase, etc.). Streit analogized such users to rental car users (who rent a car for a specific purpose, and then may not rent one again for months). Green Dot’s ideal customer, however, is one who continues to use it and reload it, such as customers who use the cards as a bank account or credit card substitute. Green Dot is continually working on ways to attract and retain these customers (which account for about 1/2 of Green Dot’s active card base).

The conference call had a number of other items of interest to analysts or researchers covering the prepaid space, including discussions of regulatory reform, the Durbin amendment, etc.

Green Dot Earnings Call: A Prepaid Card Tutorial is a post from: Prepaid Debit Cards | Teen Debit Card | Prepaid Gift Cards

The FDIC published a “template”, or wishlist of features that they would like banks to provide to low income or underbanked individuals. The template is available here. The template is described as follows:

The FDIC Model Safe Accounts Template provides insured institutions with guidelines for offering cost-effective transactional and savings accounts that are safe and affordable for consumers. The accounts reflect the following guiding principles: transparent rates and fees that are reasonable and proportional to costs, access to banking services that feature FDIC insurance, and the protections afforded by applicable federal and state consumer protection laws, regulations and guidelines.

We thought it would be interesting to compare the feature list from the template with a couple of existing prepaid debit card accounts. While several prepaid cards met or exceeded many of the FDIC features, the MangoMoney MasterCard from MPower Labs fit the requirements nicely.

The FDIC template included a number of “auxiliary services and fees” that we did not compare (in the interest of time), however, the MangoMoney Card seems to be a great example of a product that fits the primary requirements the FDIC has for cost effective transactional and savings accounts.

Below is a table comparing the FDIC wishlist features (on the left) with the MangoMoney card features (on the right). (note: as always, make sure to read a card’s fees and terms and conditions — the features and fees listed below are subject to change!)

. FDIC Feature List How the MangoMoney Mastercard Meets the FDIC Feature List . Card-Based Electronic Account Check. MangoMoney provides both a card-based transaction account and a savings account . . No Overdraft or NSF Fees Check. No overdraft or NSF fees on the MangoMoney card. . . Interest Bearing Savings Account Check. As of August 11, 2010, Mango provides 5.10% APY on savings. . . Free Direct Deposit Check. MangoMoney provides (and encourages) use of its free direct deposit . . Free Automatic Saving Check. MangoMoney provides free tools to transfer to savings. (May not be automatic, but may transfer by web or by phone) . . Free Online and Mobile Banking / Bill Pay Check. MangoMoney users can pay billers by EFT (with PAN and Routing Numbers) or by providing their debit card number. . . Free Electronic Statements (with Consumer's Consent) Check. MangoMoney provides free online account statements. . . Opening Balance from $10-$25 for transaction account, $5 for savings Check. MangoMoney has no opening balance requirement for the transaction account, and a $1 opening balance for savings (users must have Direct Deposit to qualify) . . Monthly Minimum Balance ($1 for transactional, $5 for savings) Check. MangoMoney has no minimum balance for either account. . . Monthly Maintenance Fee (under $3 for transactional, free for savings) Check. MangoMoney has $0 monthly maintenance fees if $500 is deposited the prior month.

. . Money Orders / e-Checks (2 free per month) Check. MangoMoney charges no fees for "e-checks" (if that term is used to refer to EFTs). . . Check Cashing (free if drawn on insured institution, reasonable if not drawn on insured institution). Maybe. MangoMoney does not provide check cashing (although based on a discussion with a MangoMoney customer service agent, it appears that checks may be deposited by mail without a fee). Also, customers near a MangoMoney financial center (only in TX) may cash checks for a fee. . . General Funds Availability (same day or next day) Check. Direct deposits are available same day or next day. Transferred funds (e.g., using the YAP service) also enjoy fast funds availability.

Prepaid debit cards, including the MangoMoney MasterCard, are not perfect. They have fees, and they have limitations. However, for many uses, the cards can be a great (if not perfect) choice.

Hey FDIC: Many Prepaid Debit Cards Already Meet Your Needs is a post from: Prepaid Debit Cards | Teen Debit Card | Prepaid Gift Cards

The Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) criminalized Internet wagers by making it illegal for banks to process Internet gambling-realated transactions using credit or debit cards. Representative Barney Frank was instrumental in obtaining a delay in the date for implementing regulations in the UIGEA. In particular, the regulations were delayed by six months, from Dec. 1 to June 1, 2010.

When the regulations went into force, a number of prepaid debit card companies took quick steps to let their users know of the change. There were reports that NetSpend Corp., for example, played a voice message on all customer service calls for at least a few days around the June 1, 2010 deadline, letting all cardholders know that NetSpend cards can no longer be used for transactions involving Internet gambling.

HR 2267 To Legalize Some Internet Gambling

Rep. Barney Frank is now sponsoring HR 2267, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act, which would create federal supervision for certain online gambling sites, effectively legalizing Internet gambling again. One of the key features of HR 2267 is the removal of certain of the UIGEA restrictions which made it illegal for payment card companies to allow their customers to engage in Internet gambling. HR 2267 specifically provides that:

No financial transaction provider shall be held liable for engaging in financial activities and transactions for or on behalf of a licensee or involving a licensee, including payments processing activities, if such activities are performed in compliance with this subchapter and with applicable Federal and State laws.

Prepaid Debit Card Companies: Big Winner?

Prepaid debit card issuers stand to be a big winner, if the current version of HR 2267 is eventually enacted. Until enforcement of the UIGEA, prepaid debit cards were a popular option of gamers to deposit and receive funds from their Internet gaming sessions. So prepaid card companies would likely see a boost in transaction volumes if HR 2267, in its original form, were passed.

However, during the House Financial Services Committee markup session, several amendments to the original version of HR 2267 were passed. Most significantly for prepaid debit card companies, Rep. Frank introduced an amendment that would, for many transactions, ban the use of credit cards. In particular, the amendment provides:

No licensee, no person operating on behalf of a licensee, and no person accepting payment for or settlement of a bet or wager who intends to transmit such payment to a person licensee, may accept a bet or wager or payment for or settlement of a bet or wager that is transmitted or otherwise facilitated with a credit card…

Several exceptions to this prohibition exist, but for the majority of transactions, credit cards would be prohibited.

Taxpayers: Another Big Winner?

Advocates of HR 2267 point to the huge revenue stream such a law would bring to all levels of government. An analysis by the Congressional Joint Committee of Taxations found that regulated Internet gambling could bring in $42 billion over the first decade of the bill’s realization at the federal level. States could see a 6 percent deposit fee generate an additional $30 billion.

“Those figures assume you are starting with an industry where millions of players are already engaged,” pointed out Michael Waxman of the Safe and Secure Internet Gambling Initiative. “And with regulation, there is an expectation that many more will take up and enjoy this form of recreation. There is a strong possibility that this bill would be included in a larger legislative package as a way to offset the cost of other programs.”

HR 2267 is expected to go to the full House for a vote before the end of this session.

Winners if Gambling Law Passes: Casinos, Taxpayers and Prepaid Debit Card Companies is a post from: Prepaid Debit Cards | Teen Debit Card | Prepaid Gift Cards

Visa’s debit card volumes continue to grow significantly. In the earnings call, Joseph Saunders, Chairman and Chief Executive Officer of Visa Inc., spent some time discussing the prepaid debit card market (spending a relatively significant amount of the earnings call on the topic).

Mr. Saunders sees huge opportunity in the space, stating that: “in the US we believe this [prepaid debit] is a $1 trillion potential market while globally it could be as high as $3 trillion.”

Mr. Saunders also discussed their progress in prepaid and gave further details of their view of the prepaid market size and opportunity, stating:

We also continue to make very nice headway in the prepaid space, not only here in the US but in a number of regions globally. Prepaid, which is a natural extension of our already successful debit presence, is a business that we have been in for quite some time in the US and in which we are seeing enormous opportunity internationally.

Domestically we currently run 66 different programs with 38 States for government disbursements. In the health care arena, seven of the top 10 insurance companies offer Visa spending account cards.

Other important categories in which we are active and have been quite successful include gift cards, general purpose reloadable cards, and payroll programs, to name a few.

Stacked up against worldwide Visa payment volume for the 12 months through March of $2.7 trillion, it’s easy to see that even a nominal penetration of this market could be needle moving for us.

The largest opportunity globally is penetrating the under banked segment with general purposed reloadable cards. The under banked includes both the under served, those who don’t have access to mainstream financial services, and those that choose (for a wide variety of reasons) alternative financial services.

In the US, about 80 million individuals fall into the under banked category. Globally the underbanked may be a majority of consumers. Our success in debit in the U.S. should provide key advantages as we further penetrate the prepaid space.

Visa, start breaking out the prepaid debit numbers in your reports separately so we can follow along with your progress!

Visa CEO: Prepaid is a $3 Trillion Market is a post from: Prepaid Debit Cards | Teen Debit Card | Prepaid Gift Cards

How many times have you used your debit card online to make a purchase?

In the early days of the Internet, we carefully protected our card information. Then the payment associations (including Visa, MasterCard and American Express) introduced their Zero Liability policies and convinced us that it was safe to use our cards online. Now, consumers rarely think twice about using credit or debit cards to make online purchases.

But how safe is it really?

According to the Web Security firm, Symantec, one of the biggest selling items online is stolen credit card and debit card information. According to their most recent Internet security theft report ,

Credit card information was the most commonly advertised item for sale on underground economy servers known to Symantec, which accounted for 28 percent of all goods and services advertised—an increase from 17 percent previously.

The price range of credit cards this quarter ranged from $1 to $30 (all figures in USD) per card number. There were three main factors that influenced the price of credit cards: the type of card, the country of origin, and the amount of bundled personal information used for card holder verification. Symantec observed bulk purchase offers of 1,000 credit cards for $1,500.

The second most commonly advertised item for sale on underground economy servers known to Symantec this quarter was bank accounts, accounting for 24 percent of all advertised goods. The advertised price for bank accounts ranged from $10 to $125 and bank balances ranged from $373 to $1.5 million.

According to the Federal Trade Commission, identity theft is the fastest growing form of fraud in the U.S., and credit card fraud was the most common form of reported identity theft in 2009. Federal laws (such as Regulation E) and bank and credit card rules (such as MasterCard’s Zero Liability Policy) protect consumers who use debit or credit cards in certain transactions.

Certainly, these forms of protection help make it less of a risk to use a credit or debit card online. However, consider the other issues that theft of a debit or credit card raise. When your payment card information is compromised, you need to cancel the card. You need to get a replacement card. You need to contact billers to let them know of your new card information. The cost, in terms of time and effort, can add up quickly (and Visa or MasterCard are not going to reimburse you for that time or your frustration!).

Recurring Payments Make the Problem Bigger

The amount of time and effort you’ll need to take to deal with a lost or stolen credit or debit card increases with the number of automatic or recurring payments you’ve linked to your card. For example, if you have linked your card as the funding source for Apple iTunes Store, Amazon.com, Netflix, and other merchants, you’ll need to deal with all of those merchants if the card is lost or stolen.

Online retailers work hard to make it easy to use credit and debit cards for everything from single pay transactions (such as when you buy a book at Amazon.com, or a airplane ticket through Expedia.com), to recurring pay transactions (such as for subscriptions). Apple recently sold its 10 billionth song through the iTunes Store. Most of those songs were purchased using debit or credit card accounts linked to iTunes.

Some think that subscription or recurring payments will be the predominant revenue model on the internet starting in 2010.

But what if you could proactively control or limit your risk (and minimize the frustration associated with credit or debit card theft)?

You can, using prepaid debit cards.

Prepaid debit cards that have a Visa or MasterCard logo on them are typically entitled to the same Zero Liability Protection as regular debit or credit cards. Unlike a debit card linked to your checking account, however, a prepaid debit card is only at risk for the amount of funds you have deposited (or “prepaid”) into the account. Further, you can have multiple prepaid debit cards, and use them for different purposes.
Here are a few examples of ways you could use prepaid debit cards to minimize your risk of conducting transactions online.

Tactic: Use a prepaid debit card for all of your Internet transactions.
Benefit: If your account information is lost or stolen, your total losses are capped, and you won’t need to cancel (and replace) your primary credit or debit cards

Tactic: Use a prepaid debit card for recurring Internet transactions (for example, if you are a regular iTunes buyer, use a separate prepaid debit card with a balance equal to your budget for iTunes).
Benefit: Better budgeting and control of expenses (you can only spend what you put on the card), and reduced exposure to loss or theft of your card. If your account information is lost or stolen, your total losses are capped, and you won’t need to cancel (and replace) your primary credit or debit cards.

But what about the fees associated with prepaid debit cards?

It’s true that many prepaid debit cards charge monthly and other usage fees. However, many prepaid debit cards are available that have extremely low fees, making them perfect choices for the above tactics. For example, the Yap Prepaid MasterCard can be almost fee-free (if you load at least $500 each month onto the card). Other cards are available with similar fee structures.

Using Prepaid Cards to Minimize Risk of Shopping Online is a post from: Prepaid Debit Cards | Teen Debit Card | Prepaid Gift Cards

Green Dot Corp. sent bullish signals to the market by upping its offering price to $36 a share the evening before the offering. The stock had been expected to be listed at between $32 to $35 per share.

At 2pm Eastern, the shares were trading at over $44, just off their high of near $45. Over 4 Million shares have traded.

Several events over the last week may have lead to the high demand for GDOT, including Green Dot’s increase in the initial share price, their increase of the number of shares offered (Green Dot added an additional 8% of shares from its original prospectus), and the signing (just yesterday) of H.R.4173 – Dodd-Frank Wall Street Reform and Consumer Protection Act.

The financial reform bill specifically excluded reloadable prepaid debit cards (such as those offered by Green Dot) from a number of provisions, including provisions relating to debit cards and interchange.

Wal-mart Stores Inc. (NYSE:WMT) is a big beneficiary of the Green Dot IPO, holding 2,208,552 Class A shares (although Wal-Mart is not selling those shares in today’s offering). Trading at midday values Wal-Mart’s stake at over $97 Million.

Another big beneficiary is Green Dot Corp. CEO Steven Streit, who was expected to sell 1.59 million Class A shares today.

Green Dot Corp. is the first major prepaid debit card company to go public, with its competitor, NetSpend Corp. next in line for an IPO.

Green Dot Hits the Mark is a post from: Prepaid Debit Cards | Teen Debit Card | Prepaid Gift Cards

The report (available by request from the NBPCA) includes an overview of the network branded prepaid market as well as an introduction to network branded prepaid cards (which are prepaid cards bearing a network logo, such as that of Visa, MasterCard, Discover or American Express).

The real purpose of the report, however, is to describe how a typical consumer uses a prepaid debit card. Several profiles of consumers are presented to illustrate how a prepaid card can provide financial, time, and quality of life benefits.

For example, one of the consumer profiles is of “Jason”, a college student, who earns under $10k a year. The profile shows how Jason could save money by using a prepaid card instead of a checking account. In particular, Jason could save a significant amount each year by using a prepaid debit card instead of a checking account just based on the avoidance of overdraft fees. The report assumes the use of a general prepaid card that has relatively high fees (including a $9.95 activation fee and a $4.95 monthly fee).

Based on our knowledge of the demographic and usage patterns of prepaid debit cardholders, it appears that the consumer profiles presented in the NBPCA report appear to be reasonable. Further, the cost savings shown in the report are similar to those presented on GetDebit.com in our prepaid card reviews.

For readers who want to better understand the demographic of typical prepaid debit card users and their usage patterns, this report from the NBPCA is a must-read.

Prepaid Card Association: How Consumers Actually Use Prepaid Cards is a post from: Prepaid Debit Cards | Teen Debit Card | Prepaid Gift Cards

In an indication of the demand for shares of the prepaid debit card company, Green Dot Corp. has increased the number of shares it will offer in the company’s upcoming IPO. The shares will be traded on the NYSE under the symbol “GDOT”. When Green Dot priced the offering, on July 9, they intended to offer 3,850,000 shares. Today, Green Dot filed a further amended registration statement, indicating they will offer 4,170,827 shares.

The increased demand may be due, at least in part, to the passage of H.R.4173 – Dodd-Frank Wall Street Reform and Consumer Protection Act last week (the bill is expected to be signed by President Obama this week). The financial reform bill specifically excluded reloadable prepaid debit cards from a number of provisions, including provisions relating to debit cards and interchange. The exclusions may help boost the outlook for shares of prepaid debit card companies such as Green Dot Corp.

The registration document filed on July 9, 2010 shows the following:

And the Green Dot (NYSE:GDOT) registration document from July 19, 2010 shows the shares as follows:

The Green Dot IPO is shaping up as one of the more highly anticipated IPOs of the summer.

Green Dot issues prepaid debit cards, including the Green Dot Prepaid MasterCard, and also operates the Green Dot Reload Network (used to load and reload a wide variety of different prepaid cards).

Green Dot IPO: What a Difference a Week Makes is a post from: Prepaid Debit Cards | Teen Debit Card | Prepaid Gift Cards