Prepaid Debit Card Reviews, Complaints, Etc

Tag: Walgreens

  • The Debate Over Green Dot

    The Debate Over Green Dot




    Analysts disagree about how much longtime prepaid debit card supplier Green Dot should worry about new competitors

    By Shane Tripcony

    Recently, (Green Dot Corporation- click for our review of their prepaid card) has been a source of debate and disagreement. A longtime issuer of prepaid debit cards, Monrovia, California-based Green Dot, is an established player in the industry, selling Visa and MasterCard branded prepaid cards both online and at tens of thousands of retail locations. In its most recent quarterly earnings report this past July, Green Dot not only declared that both its net income and revenue were 4 percent higher than the year before, but it also raised its full-year guidance.

    Not everyone is as rosy about Green Dot’s position in the prepaid industry. In mid-October, the company’s stock price took a tumble after Janney Capital Markets’ analyst, Thomas McCrohan, issued a client note (http://www.businessweek.com/ap/2013-10-16/analyst-cuts-green-dot-to-sell-on-competition) downgrading his rating of Green Dot from “Neutral” to “Sell.” McCrohan’s dimmed view on Green Dot’s fortunes were due to what he saw as stiffening competition from big financial players like American Express. In particular, McCrohan cited the low (or non-existent) reload fees available with cards such as AmEx’s Serve and newly introduced cards from retailers like Walgreen’s.




    In McCrohan’s analysis, Green Dot’s Wal-Mart MoneyCard, which has a $3 reload fee, doesn’t stack up well. “Paying a fee to reload cash onto a card is an irritant to most consumers, and retailers are beginning to turn to zero-fee reloads as a tool to drive foot traffic,” McCrohan wrote in his note to clients.

    McCrohan’s comments about Green Dot came during a stretch in which the company’s shares slid to three months’ low. Not everyone seems to share McCrohan’s dour view on Green Dot. On October 29, Piper Jaffray analyst, Michael Grondahl, (http://www.businessweek.com/ap/2013-10-29/green-dot-climbs-as-analyst-raises-rating)elevated his rating of the company from “Neutral” to “Overweight.” Grondahl said that the impact of increased competition on Green Dot’s business health was being overstated. He also noted that Wal-Mart is not pressuring the company to reduce fees on its card and is instead offering a larger selection of Green Dot cards.

    McCrohan, Grondahl and other observers of the quickly expanding prepaid industry will be able to quibble all the more soon. On October 31, Green Dot is set to (http://ir.greendot.com/phoenix.zhtml?c=235286&p=irol-newsArticle&ID=1865243&highlight=”) announce its third quarter financial results.

  • Walgreen’s Launches A Prepaid Card

    Walgreen’s Launches A Prepaid Card

    The drugstore chain puts a prepaid debit card at the center of its financial services options

    by Shane Tripcony

    Walgreen’s is already the place millions of Americans head to in order to pick up everything from deodorant to Halloween candy to prescription drugs. Now the nationwide drugstore chain is adding financial services, including a prepaid debit card, to its already lengthy menu of offerings.

    On October 7, 2013 the Illinois-based retail giant announced that its new Balance Financial Prepaid MasterCard is available to customers in 250 Walgreen’s stores in Detroit, Milwaukee and Nashville. The company also said that the new prepaid debit card will be available nationwide by the end of the year.

    In making a foray into the prepaid debit card market, Walgreen’s reiterated a reality that has already prompted so many other large banks and financial institutions to unveil their own products. The many Americans lacking traditional bank accounts need an alternative to cash transactions and ultra-high fee check cashing and payday lending services. “Millions of Americans do not have – or want alternatives to – traditional checking accounts and debit cards,” says Jason Dubinsky, Walgreen’s vice president and treasurer. “For them, Balance Financial will represent safety, convenience, value and rewards. With Balance Financial as our platform, over time we plan to add more features and functionality that give our customers even more powerful financial tools to get, stay and live well.”

    In other words, the new Walgreen’s prepaid debit card is just the start. While Walgreen’s is already planning to offer Western Union Money Transfers and bill payment services in 2014, the details around the features of its prepaid debit card have already been set. Notably, the card will allow for no-fee ATM withdrawals for cardholders at most of the 8,000-plus Walgreen’s and Duane Reade stores nationwide. Balance Financial customers will also be able to check their account balance, move funds and view previous transactions on a website, mobile app or even at in-store kiosks. Like many other prepaid debit cards, Balance Financial can be reloaded for free via direct deposit. Also like similar products, the Walgreen’s prepaid card comes with a variety of fees, including a $2.95 account activation fee and a $2.95 monthly charge.

    Where the new Walgreen’s card is somewhat different from its competitors is in how it is synchronized with the store’s customer loyalty program. Use of the Balance Financial prepaid card earns points for every dollar a customer spends at Walgreen’s. Users of the card can also earn points for in-store reloads and direct deposits, points that can be used for future savings and other benefits. Dan Caplinger, the financial website Motley Fool’s Director of Investment Planning, recently wrote that this is the “real genius of the Walgreen’s offering” because it encourages customers to stick with the drugstore and make repeat visits. “If it’s successful, then you can expect not only Rite Aid and other direct competitors to follow suit but also a broader set of retailers hoping to cash in on the same trend,” he says.

  • Employers Cannot Mandate Prepaid Cards For Wages

    Employers Cannot Mandate Prepaid Cards For Wages

    Responding to complaints, the Consumer Financial Protection Bureau (CFPB) issued a reminder to employees that they cannot force workers to accept pay on prepaid debit cards.

    by Shane Tripcony

    Over the summer the practice of using prepaid debit cards to pay employee salaries garnered a lot of attention, much of it negative. News outlets, The New York Times, Time Magazine and Businessweek, report that employees of large companies such as McDonald’s and Time Warner Cable complained that they were being forced to accept wages deposited onto a prepaid debit card. They were not offered the option of a paper check or direct deposit.

    Employees, many of them earning minimum wage, argued that payment via prepaid debit card meant they were losing a chunk of their salary to a range of the standard fees associated with prepaid debit cards. In response to the outcry, New York Attorney General, Eric Schneiderman, launched an investigation into rules around the use of prepaid debit cards to pay salaries that were being broken. As part of that effort, Schneiderman requested information from 42 companies doing business in New York – including Sears, Home Depot and Walgreen’s – about their use of prepaid cards to meet payroll. “No worker should have to accept a form of payment that reduces take-home pay and leads to hundreds of dollars in fees,” Schneiderman told NBC News.

    Now Schneiderman is receiving support from the federal government. Last month the Consumer Financial Protection Bureau (CFPB) issued a bulletin reminding employers that they cannot require employees to receive wages on a prepaid debit card. “Today’s release warns employers that they cannot mandate that their employees receive wages on a payroll card,” CFPB Director Rich Cordray said in a statement. “And for those employees who choose to receive wages on a payroll card, they are entitled to certain federal protections.

    In its statement, the CFPB declared that the use of prepaid debit cards to pay wages falls under its jurisdiction under the Electronic Fund Transfer Act and Regulation E. These provisions outline a number of employee protections specific to prepaid debit cards. Among them are written disclosures of all fees related to the cards, access to account history and limited liability in the case of unauthorized use of a card.

    In making its declaration concerning employers’ use of prepaid debit cards, the CFPB announced its intention to aggressively enforce the rules. “The Bureau intends to use its enforcement authority to stop violations before they grow into systemic problems, maximize remediation to consumers, and deter future violations,” reads a statement from the CFPB.

     

Prepaid Debit Card Reviews, Complaints, Etc