Green Dot 2011 Annual Report Download - page 13

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Type of Distributor Representative Distributors
Mass merchandise retailers . . . . . . . . Walmart, Kmart, Meijer
Drug store retailers . . . . . . . . . . . . . . Walgreens, CVS, Rite Aid
Convenience store retailers . . . . . . . . 7-Eleven, The Pantry (Kangaroo Express), Circle K
Supermarket retailers. . . . . . . . . . . . . Kroger, Blackhawk Network, Inc.
Other . . . . . . . . . . . . . . . . . . . . . . . . . Radio Shack
Most of these retailers have been our distributors for several years and all have contracts with us, subject to
termination rights, which expire at various dates from 2012 to 2015. In general, our agreements with our retail distributors
give us the right to provide Green Dot-branded and/or co-branded GPR cards and reload services in their retail locations,
in many cases on an exclusive basis, and require us to share with them by way of commissions the revenues generated
by sales of these cards and reload services. We and the retail distributor generally also agree to certain marketing
arrangements, such as promotions and advertising. Our operating revenues derived from products and services sold
at the store locations of Walmart and our three other largest retail distributors, as a group, represented the following
percentages of our total operating revenues: approximately 61% and 20%, respectively, for the year ended
December 31, 2011, 63% and 20%, respectively, for the year ended December 31, 2010, 66% and 23%, respectively,
for the five months ended December 31, 2009, and 56% and 27%, respectively, for the year ended July 31, 2009. For
the year ended July 31, 2009, operating revenues derived from products and services sold at the store locations of
Walgreens represented 11% of our total operating revenues.
Our Relationship with Walmart. Walmart is our largest retail distributor. We have been the exclusive provider of
Walmart-branded GPR cards sold at Walmart since Walmart initiated its Walmart MoneyCard program in 2007. In
October 2006, we entered into agreements with Walmart and GE Capital Retail Bank, formerly GE Money Bank (the
card issuing bank), which set forth the terms and conditions of our relationship with Walmart. Pursuant to the terms of
these agreements, Green Dot designs and delivers the Walmart MoneyCard product and provides all ongoing program
support, including network IT, regulatory and legal compliance, website functionality, customer service and loss
management. Walmart displays and sells the cards and GE Capital Retail Bank serves as the issuer of the cards and
holds the associated FDIC-insured deposits. All Walmart MoneyCard products are reloadable exclusively on the Green
Dot Network.
In May 2010, the term of the agreement among Green Dot, Walmart and GE Capital Retail Bank was extended
through May 2015. The parties also agreed to various other changes to the terms of the agreement. In particular, the
sales commission percentages that we pay to Walmart for the Walmart MoneyCard program increased significantly
in May 2010 and will increase by a smaller amount in May 2013. Walmart has the right to terminate this agreement
prior to its expiration or renewal, but subject to notice periods of varying lengths, for a number of specified reasons,
including, among others: our failure to meet agreed-upon service levels, certain changes in control of GE Capital Retail
Bank or us, or GE Capital Retail Bank's or our inability or unwillingness to agree to requested pricing changes.
Network Acceptance Members. A large number of institutions accept funds through our reload network, using our
MoneyPak product. We provide reload services to over 120 third-party prepaid card programs, including programs
offered by H&R Block, AccountNow and UniRush, LLC. MasterCard’s RePower Reload Network also uses the Green
Dot Network to facilitate cash reloads for its own member programs. In addition, we provide reload services to other
kinds of institutions and their customers. For example, we enable PayPal customers to use a MoneyPak to fund a new
or existing PayPal account.
Other Channels. An increasing portion of our card sales is generated from our and Walmart's online distribution
channels and other non-retail channels, such as our public sector initiatives. We offer Green Dot-branded cards through
our website, www.greendot.com and the Walmart MoneyCard through www.walmartmoneycard.com. We promote
these distribution channels through television and online advertising. Customers who activate their cards through these
channels typically receive an unfunded card in the mail and then can reload the card either through a cash reload or
a payroll direct deposit transaction.
Our Products and Services
Our principal products and services consist of Green Dot-branded GPR cards, co-branded GPR cards, and
MoneyPak and point-of-sale, or POS, swipe reload transactions facilitated by the Green Dot Network. We also service
general purpose gift cards, which have historically represented only a small percentage of our operating revenues.
GPR cards are designed for general spending purposes and can be used anywhere their applicable payment network,
such as Visa or MasterCard, is accepted. Unlike gift cards, GPR cards are reloadable for ongoing, long-term use and
require the completion of various identification, verification and other USA PATRIOT Act-compliant processes before