Green Dot Corp.’s latest move looks like a sign that the company will keep the green rolling in from Wal-Mart Stores Inc.
The provider of prepaid debit cards announced last week that it has taken over GE Capital Retail Bank’s Wal-Mart prepaid card business, known as Walmart MoneyCards.
That means Green Dot will now issue the cards and hold the deposits made on them, as the GE bank did. It will continue to administer the cards and process payments as it did in the past.
The move was seen as solidifying the Monrovia company’s relationship with the Bentonville, Ark., retail giant.
As a result, Green Dot’s shares were among the biggest gainers on the LABJ Stock Index, rising 8.9 percent to close at $19.04 on June 12. (See page 38.)
Green Dot’s ability to issue its own card allows Wal-Mart greater efficiency with its MoneyCard program. Wal-Mart now only has to go through one company instead of two to issue its prepaid debit cards.
Green Dot, GE and Wal-Mart were under a triparty agreement that ran until 2015.
The Wal-Mart-branded cards were sold at the retailer. Green Dot administered the card program, processing deposits to and payments from the cards, while GE issued the cards and handled the money.
The change suits Wal-Mart, one analyst said.
“Wal-Mart prefers to deal with one company,” said Gil Luria , an analyst at Wedbush Securities in downtown Los Angeles who covers Green Dot.
Green Dot will issue Wal-Mart’s prepaid debit cards through Green Dot Bank, a relatively new Green Dot subsidiary. GE exits the contract.
A Green Dot filing announcing the purchase agreement said GE wanted to focus on its main business, providing consumer credit through retailers. The documents also say GE believes Green Dot is best suited to run Wal-Mart’s prepaid card program.
“There’s no purchase price. We’re not acquiring anything for money,” Steven Streit, Green Dot chief executive, said last week at a conference in Chicago. “It’s a transfer of the assets and liabilities from GE consumer retail bank into Green Dot Bank.”
Streit said the company would give specifics about the deal’s economic benefits in an upcoming conference call.
Streit, who had worked in radio, founded Green Dot in 1999 in Monrovia and first started selling prepaid debit cards in 2001. Green Dot is considered a market pioneer and has become one of the biggest sellers of the cards, mainly marketing to those without bank accounts.
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