Next year, Green Dot’s contract with Walmart expires, a troubling detail for the prepaid card company considering that for much of its fifteen year existence, the majority of Green Dot’s profits have come from its mega-retailer parent. In recent years, that has amounted to 55-65 percent of Green Dot’s revenue.
Perhaps not wishing to be quite so dependent on Walmart, Green Dot has dropped $320 million to purchase Santa Barbara Tax Products Group.
TPG allows consumers to pay their tax-preparation fees out of their tax refund, rather than paying up front. The service is more expensive, but allows for help from a tax preparer and it also allows the unbanked early access to their refunds.
“We believe that the vast majority of these 11 million tax filers who annually choose to receive their tax refund through TPG services are prime candidates for a Green Dot-issued prepaid card or checking account,” CEO Steve Streit told analysts during a conference call, reports American Banker.
Apart from the acquisition, Green Dot also announced that it is forecasting a $30 million revenue drop from its previous estimate of $640 million to $650 million, based on trends in its core business.
Most analysts said that Green Dot will carry on in its deal with Walmart, though possibly with terms more favorable to Walmart.
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