Green Dot Corp. and NFinance Inc. announced yesterday they will cut the prices of their prepaid cards to compete with Wal-Mart Stores Inc., which claims it is on the way to 2 million cards and more than $2 billion transactions.
Green Dot's decision, in light of Wal-Mart's fee reductions six months ago, could help solidify and accelerate the young industry's growth, observers say.
"I put that in the context of Wal-Mart's repricing," says John Grund, a partner at First Annapolis Consulting Inc. But Green Dot's decision is also "just a natural stage of evolution in the industry. ... We'll see the pack start to separate. It wouldn't be unusual to see some of the big guys go for some more-intense competition to further complete the land grab in the prepaid space."
In August, Green Dot, a Monrovia, Calif.-based card marketer, will reduce its upfront fees and start waiving its monthly maintenance fees for consumers who use their cards regularly, executives said at the fourth annual Underbanked Financial Services Forum in Dallas.
NFinanSe Inc., a prepaid card provider and reload network, also announced it will cut prices of its prepaid cards to compete with Wal-Mart' reloadable prepaid cards. NFinanSe, a prepaid card provider and reload network,will cut the retail price of its Discover-branded reloadable prepaid card to $3 from $5.95 on July 1.
The card's other fees will remain the same, including a $2.95 monthly maintenance fee and $2.95 reload fee. Tampa, Fla.-based nFinanSe believes the price cut will spur more of the 73 million unbanked and underbanked consumers to use prepaid cards. Wal-Mart reduced its upfront, reloading and monthly maintenance fees to $3 each in February. ATM