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.

Rebound play

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.

Prepaid debit cards work like debit cards issued by banks, except they are not linked to a checking account. Instead, users pay for their card in advance, with fees deducted by Green Dot for the service.

Wal-Mart, CVS and Rite-Aid are a few of the retailers that distribute Green Dot cards in more than 50,000 locations nationwide. Green Dot makes money from customer fees and merchant swipe charges. Wal-Mart makes up two-thirds of Green Dot’s revenue. The company reported sales of $154 million in the first quarter of 2013.

Meanwhile, big competitors such as JPMorgan Chase & Co. and American Express Co. have entered the market to challenge Green Dot.

When Wal-Mart agreed to sell American Express prepaid card Bluebird last year, it was seen as a threat to Green Dot’s business.

Green Dot shares fell from a high of $32.33 in January last year to a low of $9.06 in July.

But the threat from Bluebird hasn’t materialized, at least not yet. Streit said in an April conference call that revenue from Wal-Mart last year increased 11 percent from the previous year. However, the Bluebird card was not sold until late in the year, so its effect for a full year hasn’t been felt.

Nonetheless, Streit said sales remain strong because customers have come to know the brand.

The GE deal was possible because of a Green Dot acquisition two years ago. When Green Dot acquired Bonneville Bancorp in Provo, Utah, now known as Green Dot Bank, it paved the way for the company to take over the banking end of the Wal-Mart business.

Luria said the deal was a sign that Green Dot could extend its contract with Wal-Mart past 2015. And that would be beneficial for Green Dot’s stock.

“Anything that improves their chance to renew their contract will drive their stock up,” he said. “The important part is that they do renew their contract with Wal-Mart.”

Others are taking a wait-and-see stance in regards to Green Dot’s contract extension with Wal-Mart.

“We believe the acquisition signals Wal-Mart’s commitment to Green Dot beyond the current contract, which runs through 2015. That said, the contract will still need to be formally renewed,” said Southern California Sterne Agee analyst Greg Smith, who also covers Green Dot, in a report.

However, “we expect further pricing pressure,” Smith said, an apparent reference to Wal-Mart’s practice of driving down prices from its vendors.

Streit said there was no timeline for contract renewal talks and that it was an ongoing process.

“We negotiate every time we pick up the phone,” he said during the conference.

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