Just recently the U.S Treasury Department introduced a pilot programed that incorporates prepaid cards into the tax refund process. The program is aimed at low to moderate income Americans and will provide them with a prepaid debit card for the purpose of receiving their income tax refund. The Treasury Department will mail around 600,000 letters to individuals throughout the country explaining the program benefits. The letters will inform these consumers about the program and invite them to activate a MyAccountCard Visa® Prepaid Debit Card in time to have their 2010 federal tax refund direct deposited to the card. The MyAccountCard is provided by Green Dot Corp who is one of the leaders in the prepaid card industry.
This is a big win for the Green Dot Corp. because it is reported they might be both the program manager and the issuing bank. Typically, these roles are not performed by the same company which results in splitting the profits between the companies involved. If Green Dot ends up performing both roles they will earn all the profits. It usually works by having one company, like Green Dot Corp., handle the program manager responsibilities, in conjunction with the issuing bank.
This partnership with the U.S. Treasury Department could increase Green Dot’s customer base by 600,000 in just the first quarter of 2011. These new customers will be receiving a large amount of money for their refund, directly deposited to their new cards. It is common that prepaid card activations are on an upswing during tax season. Last year, according to Green Dot, Green Dot’s relationship with TurboTax accounted for approximately 5% of active cards during Q2 2010 (and more than that in Q1). The numbers dropped off in Q3 (with around 2% of active cards in June 2010) as cardholders took their tax refunds off the cards. This program is expected to be a big success for Green Dot.
No comments yet.