NetSpend 2011 Annual Report Download - page 7

Table of Contents
segments of the population, particularly those without a checking or savings account and those reliant on alternative financial services such as
non-bank money orders, check cashing, rent-to-own agreements and payday loans. We refer to this segment of the population as the
"underbanked" and we believe approximately 60 million adults in the U.S. fall within this demographic. In our view, many underbanked
consumers are dissatisfied with the traditional banking sector due to expensive fee structures, including minimum balance fees and overdraft
charges, denial of access to credit products due to a lack of credit history or poor credit or a distrust in non-cash financial instruments. In
addition, many traditional financial services providers are not open during hours or located in areas that are convenient for underbanked
consumers.
As a result of their lack of access to traditional bank services, many underbanked consumers have historically used cash as their primary
payment vehicle. However, the reliance on cash inherently limits these consumers' purchasing power and flexibility. For this portion of the
population, prepaid debit cards have emerged as an attractive alternative to cash, allowing a cardholder to participate in mainstream financial
transactions by other means. Our mission is to facilitate this transition.
Business Strategy
Our goal is to be the leading provider of GPR cards and related alternative financial services to underbanked consumers. We are pursuing
a number of approaches to achieve this objective.
We plan to increase cardholder usage and retention by increasing the number of our cardholders who deposit their wages, government
benefits or tax refunds directly onto their cards. We plan to continue to provide competitive pricing while adding functionality and
complementary products and services that will encourage underbanked consumers to use our cards as the equivalent of a traditional bank
account over longer periods of time.
We also plan to develop new distribution relationships with leading national retailers and corporate employers in order to grow and
diversify our cardholder base. For example, consumers can now buy and reload our GPR cards at approximately 5,000 7-Eleven locations and
we are in active discussions with a number of other major retailers. We expect that our distribution relationship with PayPal will assist us in
developing and executing this expanded distribution approach. We also plan to continue our efforts to refine and improve our on-line
distribution capabilities and our relationships with providers of alternative financial products. Our paycard business will also focus on
continuing to add issuing banks and their corporate clients to our portfolio.
Products and Services
The GPR card is our core product. As of December 31, 2011, we had approximately 2.1 million active cards. We consider a GPR card to
be "active" if a personal identification number, or PIN, or signature-based purchase transaction, a load transaction at a retailer location or an
ATM withdrawal has been made with the card within the three month period preceding the date of determination.
Funds may be loaded onto the GPR cards we market at retail locations within our distribution and reload network, through the direct
deposit of wages, government benefits or tax refunds, from a cardholder's bank account through our online banking portal or through an
electronic transfer by a third party.
We provide a feature rich suite of products and services to our cardholders, including direct deposit, overdraft protection through our
Issuing Banks, complimentary insurance coverage and online bill payment options. Our cardholders also have the ability to transfer funds to
other cardholders and deposit a portion of their funds into an interest-bearing savings account linked to their GPR cards. We also provide
certain cardholders with a "cushion" that allows them to overdraw their card accounts by up to $10 without a fee. Our website allows our
cardholders to access their account information and
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