Green Dot acquires UniRush as competition to gain share in the commercial prepaid card space intensifies

Print

Email

Green Dot, California based prepaid Mastercard and Visa cards issuer has announced acquisition of Ohio based UniRush LLC. UniRush offers prepaid Visa debit cards that can be used to deposit and withdraw money, shop online, make purchases at POS, and pay bills. At the end of 2016, Green Dot had a portfolio of 4.13 million active cards. With this acquisition, Green Dot aims to bolster its prepaid card market in the country as UniRush’s Rapid! Paycard has a customer base of 2,500 companies. The deal has been finalized for $147mn in cash and yearly earn-out payments of $4mn for five years. The transaction is expected to be completed by the end of Q1 2017.

Over the last decade, prepaid debit card market in the US has witnessed significant shift. Earlier, the prepaid debit cards were offered to the unbanked customers as an alternative to the expensive cheque issuance mechanism. However, now the number of prepaid cards has grown hugely and is issued not only to the unbanked but also to those customers who are willing to keep their expenses in control. Various banks such as JP Morgan Chase, BBVA, American Express and other firms such as Walmart, Western Union, and PayPal are also issuing their own prepaid cards. The prepaid card market in Gross Dollar Value terms increased at a CAGR of 17.9% during 2012-2016. Over the forecast period of 2017 to 2021, the category is expected to record a CAGR of 13.6%, increasing from US$ 631.2 billion in 2017 to reach US$ 1.05 trillion by 2021.

Smaller financial services providers have been building their own prepaid debit card portfolio. Green Dot and RushCard are two such firms that offered prepaid debit cards to businesses. With the number of players rising in the market, leading companies are taking various steps such as reducing fees to remain competitive. Over the years, Green Dot’s operating margins and return on equity have reduced. It will be interesting to see how the firm’s acquisition strategies offer growth that it intends to place in the industry.

To know more and gain deeper understanding of prepaid card industry in the United States, click here