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The acquisition by TSYS of prepaid card company NetSpend means the payment processor will manage a delicate balance between being a vendor to banks and being a consumer-facing company.
February 21 -
The purchase of NetSpend, which came at a hefty price for TSYS, signals that the prepaid card industry has come into its own.
February 21 -
For the processor Total System Services (TSS), buying the prepaid card marketer NetSpend (NTSP) is transformational. For NetSpend it's going to be business as usual, the companies say.
February 19
Prepaid card issuer Green Dot (GDOT) has extended its payment processing contract with Total System Services (TSS), the prepaid company disclosed in a Securities and Exchange Commission filing Friday.
The 16-month contract extension was signed Wednesday, just one day after TSYS announced its purchase of NetSpend Holdings, an Austin, Texas-based prepaid card marketer that is one of Green Dot's top rivals.
"Given the size of our portfolio and the number of products included in that portfolio, we believe that extending our current TSYS agreement beyond 2014 provides Green Dot with additional risk mitigation and flexibility as it relates to back-end transaction processing," a Green Dot spokeswoman said in an email.
During a conference call shortly after the NetSpend purchase was announced, an analyst asked TSYS president and chief operating officer Troy Woods about the $1.4 billion acquisition's effect on his company's relationship with Green Dot.
"We have a great relationship with them,"
Last April, Green Dot chief executive officer
But the 16-month contract extension, which will continue the relationship until Dec. 31, 2015, suggests that Green Dot is not on the verge of being able to operate without an outside payments processor.
"It sounds like they're not ready to go it alone yet," says Madeline Aufseeser, a prepaid industry analyst at Aite Group.
A Green Dot spokeswoman did not immediately respond to a request for comment Friday.