Green Dot is also seeking federal and state approval to acquire its own bank, having reached agreement in February to acquire Bonneville Bank, a small Utah-based commercial [image-nocss] bank, for $15.7million.
The company said in a regulatory filing that it expected to focus the bank on issuing its cards, "and initially, on a pilot basis, savings accounts to our core customer base."
Green Dot prepaid cards are also available at many retailers, including 7-Eleven, Walgreens, Kroger, Rite Aid, CVS and more.
Walmart abandoned a bid to acquire a banking license in 2007, amid a storm of opposition from the banking industry and political opponents, said the report. It has subsequently focused on developing financial services with partners including Green Dot.
The holding will give Walmart less than 1% of Green Dot's voting shares after a planned initial public offering by the prepaid operator that is expected to raise up to $150 million, according to regulatory filings cited by the newspaper.
The stake reflects the growing importance of Walmart's prepaid, reloadable MoneyCard business, which it uses largely to build customer loyalty among its primarily low-income core customers, many of whom lack bank accounts, the report said.
The cards, issued by GE Money's bank and launched in June 2007, are linked to Green Dot's web-based network. Customers can use the network to add cash to their cards, which they can then use for card-based purchases, without the risks of crime or loss associated with cash.
The retailer also now uses direct deposits to the prepaid cards, rather than checks, to deliver weekly wages to more than 90% of its 1.4 million employees.
Walmart said this month that "billions of dollars" had been loaded on to its prepaid cards since the launch.
Green Dot said in a regulatory filing this month that its card business through Walmart accounted for 63% of its $92.8 million in revenues in its most recent quarter. It said it had about 3.4 million active cards. Its Walmart business doubled in size in its second full year of operation, to $131 million, and was growing in the eight months ending March 30 at a rate of about 50%.
In mid-May, Walmart announced the first cash-back incentive for consumers using a prepaid debit card. When customers use the Walmart MoneyCard to buy gasoline for their vehicles, they will receive 1% cash back on their gasoline purchases nationwide through Dec. 31, 2010, the Bentonville, Ark.-based company said in a press statement.
The Walmart MoneyCard is a reloadable prepaid Visa debit card that costs $3 to purchase, does not require a bank account or credit check and does not incur overdraft fees. Customers buying new Walmart MoneyCards will be automatically enrolled in the cash-back program, while customers who already have Walmart MoneyCards can enroll. The cash back will be added to the Walmart MoneyCard balance.
The Walmart MoneyCard is issued by GE MoneyBank with additional services provided by Green Dot. The Walmart MoneyCards are available at U.S. Walmart stores and can be used everywhere Visa debit cards are accepted. The Walmart MoneyCards are protected by the Visa Zero Liability Policy, which protects the cardholder from unauthorized purchases, fraud and theft if the card is lost or stolen.
The Walmart MoneyCard can be used for many purposes, including:
Shop everywhere Visa is accepted, including online and at walmart.com. Direct deposit your paycheck to the card. Get cash from millions of ATMs worldwide. Pay bills including cable, cell phone and others. Pay for gas, groceries and more. Use at restaurants, make hotel reservations, buy airline tickets. Budget and track spending online with E-Mail/SMS Balance Alerts. Walmart is a leading provider of affordable money services that help customers manage their money and keep their finances on track. The company estimates that last year customers saved $450 million in fees by using Walmart money services. These services include:
Check Cashing: With Walmart check cashing, customers can conveniently cash payroll or government checks, including tax-refund checks, starting at $3. Bill Payment: Walmart offers three-day, next-day and same-day bill payment delivery options, with prices starting at 88 cents. Money Transfers: Customers can use MoneyGram to send money to friends and family around the world in minutes, for a great low fee.
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