provides processing

NetSpend Corporation, headquartered in Austin, TX, provides processing and marketing services for private and proprietary MasterCard and Visa prepaid debit cards. The company is the largest prepaid debit card processor and marketer in the United States and sells cards at about 10,000 grocery and convenience stores, gas stations and check-cashing centers nationwide. According to an article by the Austin Business Journal the privately held company has 225 employees, annual revenues in the $75 million to $125 million range and processes over $5 billion annually in card transactions. Its website states that the company has over 1 million customers nationwide.
Oak Investment Partners, is a major shareholder of NetSpend Corporation.

NetSpend’s stated goal is to provide consumers who lack established credit or banking relationships with the security, flexibility and convenience typically associated with debit and credit cards. The sub-prime credit consumer is usually charged higher fees on these product's transactions and features when compared to mainstream consumers that receive them for free or at little cost. The additional costs are representative of the additional risk that accompany the typical consumer profile who is shunned by traditional financial institutions.
NetSpend was founded by Roy and Bertrand Sosa, two brothers who were teenagers when their family moved from Mexico to the US in 1986. Twelve years later in 1998, they launched NetSpend from their one-bedroom apartment with an initial investment of $750.
The Sosa brothers believed there was a large market that was left un-served by traditional banking and financial institutions, and according to the Federal Reserve at the time of this post, 9.7 percent of households—approximately 26 million Americans—are “un-banked,” or do not maintain transaction accounts at mainstream depository institutions. An additional 40 million individuals do not have a savings account or access to credit and are considered “under-banked.” Together, the total number of un- and under-banked in the United States is estimated to be nearly 70 million people, and their aggregate annual income is calculated in excess of $300 billion.
According to the 2006 report from The Mercator Advisory Group, the Open Prepaid Card Market will grow at a CAGR of more than 32% achieving a total spend in 2009 of more than $43.8 Billion -- less than 1/4 the size of the Closed Prepaid Market in the same timeframe.
[edit]Products

The commonly used industry terms for products such as "Stored-Value Card", "Prepaid Debit Card" or "Prepaid Credit Card" are somewhat misnomers because the products do not actually store value within themselves, they do not provide the prepayment of a service such as long distance, nor do they have a credit component. Even though the cards have a Visa or MasterCard emblem they do not report to credit bureaus like true credit cards and therefore do not contribute to building or improving a cardholder's credit history. Rather prepaid debit cards allow for the depositing of funds that can be drawn upon at anytime. Prepaid debit cards are analogous in function to check cards or debit cards issued at banks and credit unions and some brokerages. In fact, the monies for prepaid debit cards are actually housed at FDIC banks. The primary differentiation is that the processing company, "Netspend" in this case, is allocating funds to individual cardholder accounts in their system vs. the actual bank's system. The bank is used as an omnibus account of sorts for all funds.
The NetSpend product line includes:
Reloadable Debit Cards: Cards can be reloaded with funds continuously.
Gift Cards: Cards are purchased in predenominated values. Cannot be reloaded. From a NetSpend long-time employee (perhaps even the longest term employee since the company's inception): "We really like when [customers] purchase the gift cards as they always leave a balance that cannot be redeemed, which adds to the bottom line."
Travel Cards: This product is a hybrid of the two previous cards. You may reload a limited number of times. There are additional travel protection benefits tied to the cardholder's purchases.
NetSpend, in conjunction with Financial Service Centers of America (FiSCA) is the first prepaid card processor to offer a savings account feature with their cards. According to the Austin Business Journal the interest rate on the savings account was increased from .75% to 3% in October 2006. According to BankRate.com the new rate is actually above the national average for regular passbook savings accounts offered by banks.
NetSpend is the first prepaid debit card provider to offer a "pink card" that contributes a portion of profits to breast cancer research and education. News Story[dead link]
NetSpend also provides card processing services for private branded products such as Capital One's Prepaid Debit Cards
[edit]Recognition