In the latest signal that the economic crisis has fundamentally changed the way Americans handle their money, the largest provider of prepaid debit cards is now buying a bank.
GreenDot Corp. got the go-ahead last week from the Federal Reserve Board to purchase Bonneville Bancorp in Provo, Utah, for $15.7 million, marking the first time a prepaid card company has won approval to buy a bank. The deal is expected to close next week, after the mandatory 15-day waiting period has ended.
GreenDot's purchase underscores the massive revenue growth and increased use of prepaid cards, which are typically used by Americans who have limited access to traditional checking accounts with debit cards. Though banking customers have been outraged over recently announced fees on debit cards, there's been little focus on prepaid-card fees, which can often exceed traditional banking fees. GreenDot's reloadable prepaid MasterCard and Visa cards, which are sold in more than 57,000 retail locations, cost as much as $4.95 to buy and $5.95 per month to use.
The Monrovia, Calif.-based company is planning to use the acquisition to develop new kinds of online bank accounts, including a low-cost simple checking account, Steve Streit, the company's CEO, said in a phone interview Tuesday. The idea would be to give workers a place to deposit their paycheck: "We have always thought that there was a compelling need for a low cost, simple account where you can get wages," Streit said. "That process has not changed much over last 100 years."
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http://www.huffingtonpost.com/2011/11/28/prepaid-cards_n_1117226.html?ref=business