Green Dot Stock

Green Dot Corporation operates as a financial technology and registered bank holding company.

The company’s technology platform enables it to build products and features that address the most pressing financial challenges of consumers and businesses, transforming the way they manage and move money, and making financial empowerment more accessible for all.

Products and Services

The company offers a broad set of financial services to consumers and businesses, including debit, checking, credit, prepaid, and payroll cards, as well as robust money movement services, such as tax refunds, cash deposits and disbursements.

The company offers several deposit account programs, including innovative consumer and small business checking account products that allow customers to acquire and manage their checking account entirely through a mobile application available on smartphone devices; network-branded reloadable prepaid debit cards marketed under several leading consumer brand names; network-branded gift cards (known as open-loop) that are sold at participating retail stores; and secured credit programs designed to help people establish or rehabilitate their national credit bureau score.

The company earns revenues from these deposit account programs primarily through fees assessed to merchants for purchase transactions initiated by its cardholders (commonly known as interchange); card revenues and other fees, principally consisting of fees charged to cardholders for certain transactions and usage of its products and platform management fees it earns from its partners for use of its technology platform and its program management capabilities; and interest income earned from the investment of deposits held at Green Dot Bank.

The company’s deposit account programs are generally issued by Green Dot Bank. It also manages programs issued by third-party issuing banks as a result of several acquisitions the company has made over the past few years. Throughout its history, the company has offered several branded deposit programs through its various channels, however, beginning in 2021 it has focused its consumer deposit account programs on its flagship product, GO2bank, offering consumers simple and accessible mobile banking designed to help improve financial health over time. GO2bank offers features, such as consumer friendly overdraft protection, high-value rewards, high-interest savings, and opportunities to establish, build, and track credit, regardless of credit history.

The company also offers a variety of products and services that specialize in facilitating the movement of funds on behalf of consumers and businesses, referred to as money processing and tax processing services.

The company’s money processing services include:

Cash transfer services that enable consumers to deposit or pick up cash and pay bills with cash at the point-of-sale at any participating retailer. The company offers this service to its deposit account programs and any third-party bank or program manager (which it refers to as network acceptance members) that has enabled its cards to accept funds through its processing system. The company refers to this retail cash transaction network as the Green Dot Network; and

Simply Paid Disbursement services that enable wages and any type of authorized funds disbursement to be sent to the company’s deposit account programs and accounts issued by any third-party bank or program manager.

The company’s tax processing services are designed for participants in the tax industry and include:

Tax refund transfers that provide the processing technology to facilitate receipt of a taxpayers' refund proceeds. When a customer of a third-party tax preparation provider chooses to pay their tax preparation fees using the company’s processing services, it deducts the tax preparation service fee and its processing service fee from the customer's refund and remit the remaining balance to the customer's account;

Small business lending to independent tax preparation providers that seek small advances in order to help provide working capital prior to generating income during the tax filing season; and

Fast Cash Advance, a consumer-friendly loan that enables tax refund recipients utilizing its tax processing services the opportunity to receive a portion of their expected tax refund amount in advance of receiving their actual tax refund.

The company earns revenues primarily through fees charged to consumers on a per transaction basis for cash transfer services, tax refund transfers and Simply Paid disbursements.

Distribution Strategy

The company offers its products and services to a broad group of consumers, ranging from never-banked to fully-banked consumers. The company focuses its sales and marketing efforts on acquisition of long-term users of its products and services, enhancing its brands and image, building market adoption and awareness of its products and services, improving customer retention, and increasing overall usage.

The company’s products and services are distributed and organized under its three reportable segments: Consumer Services, Business to Business (B2B) Services, and Money Movement Services.

Consumer Services

This segment consists of revenues and expenses derived from deposit account programs, such as consumer checking accounts, prepaid cards, secured credit cards, and gift cards that it offers to consumers through distribution arrangements with more than 90,000 retail locations and thousands of neighborhood Financial Service Center locations (the Retail channel), and directly through various marketing channels, such as online search engine optimization, online displays, direct mail campaigns, mobile advertising, and affiliate referral programs (the Direct channel).

In its Retail channel, the company operates a supply chain consisted of proprietary technology and third-party vendors to design, manufacture and distribute packaging containing ready-to-use debit cards to its network of retail locations. Consumers can purchase these debit cards and initially load funds to the account in-store. In the company’s Direct channel, consumers can open an account online or through its mobile app.

Once consumers register their account with the company, the account can be loaded through a variety of funding mechanisms, such as payroll direct deposit or utilizing its money processing services.

B2B Services

This segment consists of revenues and expenses derived from the company’s partnerships with some of the United States' most prominent consumer and technology companies that make its banking products and services available to their consumers, partners and workforce through integration with its banking platform (the Banking-as-a-Service, or BaaS channel), and a comprehensive payroll platform that it offers to corporate enterprises (the Employer channel), to facilitate payments for today’s workforce. The company’s products and services in this segment include deposit account programs, such as consumer and small business checking accounts and prepaid cards, as well as its Simply Paid Disbursements services utilized by its partners.

In its BaaS channel, the company’s partners make its banking products and services available to their consumers, partners and workforce through integration with its banking platform, and in doing so, its addressable market expands to a broader spectrum of consumers, as well as small businesses. The company’s banking platform includes an integrated bank, full program management services and enterprise-grade technology. Some of the company’s largest customers include Apple, Inc.; Intuit, Inc.; and Amazon.com, Inc., amongst others.

In its Employer channel, the company offers a comprehensive payroll platform to corporate enterprises to facilitate payments made for today’s workforce, including PayCard programs that help corporate enterprises eliminate paper checks, reduce costs and improve efficiency; on demand employee wage access; and affordable instant digital pay options that replace traditional pay methods.

Money Movement Services

This segment consists of revenues and expenses generated on a per transaction basis from the company’s services that specialize in facilitating the movement of cash on behalf of consumers and businesses, such as money processing services and tax refund processing services.

The company’s money processing services, such as cash deposit and disbursements, are marketed to third-party banks, program managers, and other companies seeking cash deposit and disbursement capabilities for their customers. Those customers, including the company’s own cardholders, can access its cash deposit and disbursement services at any of the locations within its network of retail distributors and neighborhood Financial Service Centers.

The company markets its tax related financial services through a network of tax preparation franchises, independent tax professionals and online tax preparation providers, which are sometimes referred to as electronic return originators (EROs). The company also offers these consumers the option to deposit their tax refund proceeds onto one of its debit account products, which further expands the reach of its deposit account programs.

Relationship with Walmart

Walmart, Inc. (Walmart) is the company’s largest retail distributor. It is the provider of the Walmart MoneyCard product sold at Walmart, and Green Dot Bank is the issuer of those card accounts. As the issuing bank, Green Dot Bank holds the associated Federal Deposit Insurance Corporation (FDIC) insured deposits. Pursuant to the company’s agreement with Walmart, it designs and delivers the Walmart MoneyCard product and provides all ongoing program support, including network IT, regulatory and legal compliance, website functionality, customer service and loss management. In addition to Walmart MoneyCard products, the company offers its Green Dot-branded and GO2bank deposit account products at Walmart, providing consumers the choice to purchase either Green Dot-branded products or Walmart MoneyCard products. The company is also the provider of certain Walmart-branded open loop gift cards. Walmart provides the company with shelf space to display and offer the deposit accounts to consumers. All Walmart MoneyCard products are reloadable exclusively on the Green Dot Network. Additionally, Walmart enables cash transfer services for the company’s deposit account programs and third-party programs through the Green Dot Network.

The company’s operating revenues derived from the several products and services it offers through Walmart stores and other Walmart distribution avenues in aggregate represented approximately 21% of its total operating revenues for the year ended December 31, 2022.

Investment Securities

As of December 31, 2022, the company’s investment securities were corporate bonds, agency bond securities, agency mortgage-backed securities, and municipal bonds.

Seasonality

The company experiences seasonal fluctuations in revenue, with the first half of each year (year ended December 2022) being favorably affected by large numbers of taxpayers electing to receive their tax refunds via direct deposit on its cards. Additionally, the company’s tax refund processing services business is highly seasonal as it generates the majority of its revenue in the first quarter, and substantially all of its revenue in the first half of each calendar year.

Intellectual Property

The company owns several trademarks, including Green Dot and GO2bank. Through agreements with the company’s network acceptance members, retail distributors and customers, it authorizes and monitors the use of its trademarks in connection with their activities with it.

The company’s patent portfolio consists of 13 issued patents, 2 published patents and 1 patent application pending. The remaining terms for the patents the company holds vary between approximately 4 and 20 years.

Regulation and Supervision

The company and its subsidiaries are subject to supervision, regulation and examination by various federal and state regulators, including the Board of Governors of the Federal Reserve System (the Federal Reserve), the Utah Department of Financial Institutions (the Utah DFI), and various other state regulatory agencies. The statutory and regulatory framework that governs the company is intended to protect depositors and customers, the Federal Deposit Insurance Corporation’s (FDIC’s) Deposit Insurance Fund (the DIF), the U.S. banking and financial system, and financial markets as a whole.

The company is also subject to the disclosure and regulatory requirements of the Securities Act of 1933, as amended (Securities Act) and the Securities Exchange Act of 1934, as amended (Exchange Act) both as administered by the Securities and Exchange Commission (SEC), as well as the rules of the New York Stock Exchange (NYSE) that apply to companies with securities listed on the NYSE.

The company is a bank holding company (a BHC) registered with the Federal Reserve under the Bank Holding Company Act of 1956, as amended (the BHC Act). As a BHC, the company is subject to the requirements of the BHC Act, as well as supervision, regulation and examination by the Federal Reserve, which serves as the primary federal banking regulator of its consolidated organization.

As an FDIC-insured commercial bank that is chartered under the laws of Utah and a member of the Federal Reserve System, Green Dot Bank and its subsidiaries are subject to regulation, supervision and examination by the FDIC, Federal Reserve and the Utah DFI.

Because Green Dot Bank has less than $10 billion in total consolidated assets, Green Dot Bank is subject to regulations adopted by the Consumer Financial Protection Bureau (CFPB), but the Federal Reserve is primarily responsible for examining Green Dot Bank’s compliance with federal consumer financial laws and those CFPB regulations. The Utah DFI is responsible for examining and supervising Green Dot Bank’s compliance with state consumer protection laws and regulations.

The activities of Green Dot Bank are limited to those specifically authorized under Utah banking laws and Utah DFI regulations and permissible under applicable federal law and Federal Reserve regulations.

The deposits of Green Dot Bank are insured by the DIF up to the standard maximum deposit insurance amount of $250,000 per depositor. Green Dot Bank is subject to deposit insurance assessments based on the risk it poses to the DIF, as determined by the capital category and supervisory category to which it is assigned.

The company’s deposit products and operations are subject to various federal laws, among others the Truth in Savings Act and Regulation DD issued by the CFPB, which require disclosure of deposit terms to consumers; Regulation CC issued by the Federal Reserve, which relates to the availability of deposit funds to consumers; the Right to Financial Privacy Act, which imposes a duty to maintain the confidentiality of consumer financial records and prescribes procedures for complying with the administrative subpoenas of financial records; and the Electronic Fund Transfer Act and Regulation E issued by the CFPB, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services.

History

The company was founded in 1999. It was incorporated in Delaware in 1999. The company was formerly known as Next Estate Communications, Inc. and changed its name to Green Dot Corporation in 2005.