Total System Services (TSYS) is working with well-known brands like Western Union and Brinks to boost adoption of prepaid cards as the CEO of its NetSpend prepaid unit prepares to leave the company.
The partnerships with trusted companies will position prepaid cards as a reliable product, TSYS executives said. Many companies have faced a backlash over their cards' pricing when compared to the fees of mainstream checking accounts.
TSYS CEO Philip W. Tomlinson is also preparing to retire at the end of the month, though he will remain executive chairman of the company's board until its 2015 shareholders' meeting. TSYS president and COO M. Troy Woods will take over as CEO.
TSYS is accelerating its activities in the prepaid card market, Woods said during a July 22 conference call to discuss the Columbus, Ga., processor's second-quarter earnings.
"Prepaid customers are savvy customers and want trusted, established brands that will deliver the features and high standards they are looking for," Woods said.
TSYS recently partnered with Western Union to develop a co-branded prepaid card for consumers who lack access to traditional banking. NetSpend and Western Union will jointly develop the co-branded card's features through NetSpend's platform and will deliver the card through their combined distribution networks. The launch should happen later in the third quarter, Woods said.
TSYS is launching a similar a co-branded prepaid card with Brinks, the transaction and cash handling company that entered the prepaid business in early 2013 also through a deal with NetSpend to provide payroll cards. TSYS did not provide further details on the Brinks relationship by deadline.
"It's a big win for consumer prepaid to have a partnership with a respected company such as Brinks," Woods said.
For the second quarter, which ended June 30, TSYS' overall revenue was $602 million, an increase of 30.4% over the same period in 2013, while total revenue for 2014 so far was $1.2 billion, an increase of 31.2% from a year earlier. Quarterly revenue was greater than $600 million for the first time in the company's history.
Tomlinson promised a seamless transition to TSYS' new management. "This transition is a result of a carefully developed long-term succession planning process," he said.
Tomlinson has been with the processor since 1974, about a decade before TSYS was spun off in 1983 by Columbus Bank and Trust Co. He became the company's president in 1992.