How Netspend Makes Money

Netspend is a prepaid card company that offers an alternative to debit cards, credit cards, and cash. Customers provide the company with their names and addresses, and the company mails them personalized cards which they activate and load with funds. The cards are operated by Mastercard and Visa. The company also offers prepaid business solutions, such as payroll cards, tipping solutions and a fintech platform.

Key points to remember

  • Netspend is a prepaid card company that offers an alternative to debit cards, credit cards, and cash.
  • Netspend makes its money through a variety of fees, such as monthly plan fees, transaction fees, ATM withdrawal fees, replacement card fees, and inactivity fees.
  • Netspend operates in the prepaid card industry and is one of the key players, along with JPMorgan, Brink’s, Mango, Kaiku and American Express.
  • Netspend’s owning company, Global Payments, was looking to sell Netspend in 2022 for $2 billion, but still owns the business. In 2021, Global Payments announced that it would offer Netspend’s cards on Amazon Web Services.

Netspend industry

According to the latest statistics available, the prepaid card industry was valued at $1.73 trillion in 2019 and is expected to reach $6.87 trillion by 2030. The most popular type of card is a general purpose card , followed by gift cards. The popularity of prepaid cards is due to the fact that they allow the end user to set their cost limit according to their budget. Additionally, prepaid cards are becoming an alternative to cash and other cards for personal and business use, with users preferring not to link a card to a credit or debit account.

Key drivers of industry growth are the increased desire for cash alternatives, the continued growth of internet users, and the ability to add funds to prepaid cards through various methods (e.g., direct deposit).

Major companies operating in the space are American Express, BBVA USA Bancshares, Brink’s, Green Dot, H&R Block, JPMorgan, Kaiku Finance, Netspend, Mango Financial, Mastercard, and PayPal.

Netspend offers Visa and Mastercard prepaid cards to its customers. State and federal financial institutions partner with Netspend to issue the cards, which are insured by the Federal Deposit Insurance Corporation (FDIC). Cards allow consumers to add, spend, withdraw and manage money.

Customers can access features such as person-to-person bank transfers, direct deposit of employer or government checks, text alerts, a rewards program, budgeting tools, and an account option. progressive rate savings.

Netspend is based in Austin, Texas, and is a wholly owned subsidiary of Global Payments. The company operates more than 130,000 top-up points, where consumers can buy Netspend cards and top them up with cash.

Locations include retailers, check cashing locations, convenience stores, grocers, pharmacies, insurance providers and tax preparation companies. Netspend also provides payroll card solutions that allow employers to directly deposit paychecks to their employees’ card accounts.

Fundraising and Finance

Netspend was launched with just $750 in seed capital in 1999. After four funding rounds over the next decade, which raised $5.3 million, the company raised $204 million when it went public. on the stock market in 2010.

Netspend offers its customers two service plans: the pay-as-you-go plan and the monthly plan. The pay-as-you-go plan has no monthly fees, is for people who don’t know how many times they’ll use the card per month, and who primarily use the card for making purchases and paying bills. There is a $1.95 fee per purchase on all transactions.

Netspend offers financial solutions for an assortment of industries, such as financial services, retail, restaurant and hospitality, construction, gig economy, offering solutions such as program management, l access to earned wages, disbursements and payment cards.

The monthly plan is for people who use the card often and make many transactions per month, with the option of having the card funded through direct deposit. The monthly fee is $9.95 and there are no additional transaction fees. A reduced monthly plan of $5 is available for customers who make a total of $500 in payroll or government benefit direct deposits during the calendar month.

For domestic plans, Netspend charges $2.95 per ATM withdrawal, up to $3.95 for cash top-ups, $0.50 for balance inquiry via ATM, and $5.95 $ per month if account inactive after 90 days.

The company also charges fees for check requisitions, additional statements, additional card issuance, replacement cards, ATM transaction declined fees, replacement card fees, and expedited card delivery.

Netspend has served over 10 million customers and has over 130,000 charging points.

History and direction

Netspend was founded in 1999 by Bertrand and Roy Sosa, a Mexican-born immigrant couple looking for a more efficient way to pay bills and make payments online without having to sign up for a credit card. . The company went through four rounds of financing followed by an IPO in 2010.

The company has partnered with various companies over its history, including PayPal, Western Union, Major League Baseball (MLB), United Airlines, and Walmart. Netspend was acquired in 2013 by Total System Services. Total System Services was later acquired by Global Payments in 2019 and operates as one of its reporting segments.

The Sosa brothers are no longer involved with Netspend.

RECENT DEVELOPMENTS

In 2020, Netspend’s parent company, Global Payments, was looking to sell the division for around $2 billion. Since then, no sale has taken place and as of January 2022, Netspend still operates as a division under Global Payments.

In August 2021, it was announced that Netspend’s prepaid cards would be available for purchase on Amazon Web Services.

What is a Netspend card?

A Netspend card is a prepaid card offered by Netspend and operated by Visa or Mastercard that is not linked to a credit or debit account. A customer orders a prepaid card with a specific amount on the card and can use it for various transactions. Once the balance is depleted, a cardholder can reload the card with additional funds.

Where can I top up my Netspend card?

There are several ways to top up your Netspend card. A card can be loaded by direct deposit from your paycheck and at a variety of top-up locations, which include places such as CVS, 7-Eleven, Walmart, and Rite Aid, all of which can be found through Netspend”Charging slotFinder on its website. Cards can also be loaded via bank transfer and PayPal.

What are the monthly fees for Netspend?

Netspend offers two prepaid cards: a prepaid card with no monthly fee and a monthly fee card. The no-fee card charges $1.95 for each transaction while the monthly fee card costs $9.95 per month plus $0.50 for ATM balance inquiries and $2.95 for ATM withdrawals .

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