Thursday, October 11, 2012

Green Dot Threatened By A Bluebird

Before the market opened on Monday, American Express Company (AXP) announced the official rollout of the Bluebird card with Wal-Mart Stores, Inc. (WMT). The Green Dot Corporation (GDOT) stock collapsed nearly 20% over the next two trading days to move back to all time lows. The company obtains 62% of revenues from a deal with Wal-Mart, so the market sees this as a potential major blow.

The company provides widely distributed, low cost banking and payment solutions to a broad base of U.S. consumers. Green Dot's products and services include its market leading category of General Purpose Reloadable (GPR) prepaid cards and its industry-leading cash transfer network which are available directly to consumers online and through a network of approximately 60,000 retail stores nationwide where 95% of Americans shop.

While this deal could be a threat to the revenue stream, one has to question whether American Express is the answer for the unbanked. What is the catch? How could a company with the highest credit card fees offer lower fees than a company such as Green Dot that has been in the prepaid card business for a decade?

Read the full article at Seeking Alpha.


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