BENTONVILLE, AR - Walmart has taken an equity stake in Green Dot, an expanding U.S. financial company, a move that provides the retailer with an indirect link to a commercial bank, the Financial Times reports.
Green Dot currently provides support for Walmart's prepaid cards, and earlier this month, it issued more than 2 million shares to Walmart, which comes on the heels of last month's agreement that extends the companies' alliance until 2015.
Green Dot has been seeking federal and state approval to acquire its own bank and reached an agreement in February to purchase Bonneville Bank, a Utah-based commercial bank. In a regulatory filing, the company said that it expected to focus the bank on issuing its cards, "and initially, on a pilot basis, savings accounts to our core customer base."
Facing strong opposition from the banking industry and politicians, Walmart abandoned an earlier bid to acquire a banking license in 2007. It has since focused on developing financial services with partners including Green Dot.
Walmart's stake in Green Dot reflects the growing importance of Walmart's prepaid, reloadable MoneyCard business, a customer loyalty program targeting low-income consumers, many of whom lack bank accounts.
The cards are linked to Green Dot's Internet network, and customers use the network to add cash to their cards. Walmart also uses direct deposits to the prepaid cards to deliver weekly wages to more than 90 percent of its 1.4 million employees.
In a regulatory filing this month, Green Dot said its card business through Walmart accounted for 63 percent of its nearly $100 million in revenues in its most recent quarter. It said it had roughly 13.4 million active cards.