NetSpend 2011 Annual Report Download - page 10

Table of Contents
authorization request through the MasterCard, Visa or PULSE networks. The transaction is completed when a subsequent settlement
transaction indicating the final purchase or withdrawal amount is received by us, upon which we debit the funds from the cardholder's account.
We operate highly secure data centers in Austin, Texas and Las Vegas, Nevada with fault tolerant transaction processing capabilities. Our
data centers have been engineered to ensure minimal exposure to system failures and unauthorized access. Physical security is maintained
through restricted card key access and closed circuit television cameras. We use uninterruptible power supplies with battery backup and
generators to ensure continuous flow of power to each data center in the event of any component failure or power outage. The facilities have
dual-entrance, fiber optic SONET service for telecom redundancy.
In addition, we operate a secure in-house data center in Atlanta, Georgia. The data center includes uninterruptible power supplies with
battery backup and a stand-by generator to ensure continuous flow of power to systems in the event of power outage. Physical security is
maintained through two-factor authentication process and is monitored by closed circuit television cameras.
We are currently investing in a significant project intended to consolidate the operating platform of our employer-
marketed GPR card with
our core NetSpend infrastructure in order to increase our operating efficiencies, give us the ability to expand our feature set across our
cardholder base and reduce our technology costs. We expect to complete this platform consolidation in 2012.
Network and Telecommunications. We maintain our own networking systems that are designed to provide secure and reliable
connections to our distributors, Issuing Banks, cardholders and the other third parties, such as the card associations and other processors, on
whom we rely to provide services that are integrated into our platform.
Customer Statements and Account Information. Cardholders can verify their account status and recent transactions through our
customer service agents, through voice activation responses or by text messages to their mobile phones. Full account statements can be
accessed online and printed statements are available upon request.
Clearing and Settlement Process. We have agreements with our Issuing Banks to undertake funds management and settlement
processes through the card associations and network organizations. All cardholder funds are held by our Issuing Banks in FDIC-insured
custodial depository accounts. Members of our distribution and reload network collect our cardholders' funds and remit them by electronic
transfer to our Issuing Banks for deposit in the card accounts. Loads made through direct deposit are routed from the originating depository
financial institutions through the Federal Reserve to our Issuing Banks for deposit in the card accounts. We provide a series of daily reports and
instructions to our Issuing Banks regarding the movement of cardholder funds to enable them to reconcile their accounts.
Issuing Bank Relationships
We are dependent upon our Issuing Banks to provide us with critical products and services, including the FDIC-insured depository
accounts tied to our GPR cards, access to the ATM networks, membership in the card associations and network organizations and other
banking functions. All cardholder funds are held by our Issuing Banks and our cardholders are charged fees by our Issuing Banks in connection
with the programs we manage. Further, interchange fees are remitted by merchants to our Issuing Banks when cardholders make purchase
transactions using our cards. Our Issuing Banks compensate us for our services based on these service charges and interchange fees.
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