Green Dot 2011 Annual Report Download - page 25

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• seasonality in the purchase or use of our products and services;
• reductions in the level of interchange rates that can be charged;
• fluctuations in customer retention rates;
• changes in the mix of products and services that we sell;
• changes in the mix of retail distributors through which we sell our products and services;
• the timing of commencement, renegotiation or termination of relationships with significant retail distributors
and network acceptance members;
• the timing of commencement of new initiatives that cause us to expand into new distribution channels, such
as our public sector initiative, and the length of time we must invest in those channels before they generate
material operating revenues;
• changes in our or our competitors’ pricing policies or sales terms;
• the timing of commencement and termination of major advertising campaigns;
• the timing of costs related to the development or acquisition of complementary businesses;
• the timing of costs of any major litigation to which we are a party;
• the amount and timing of operating costs related to the maintenance and expansion of our business, operations
and infrastructure, including our investments in an in-house processing solution to replace the processing
services provided by Total System Services, Inc.;
• our ability to control costs, including third-party service provider costs;
• volatility in the trading price of our Class A common stock, which may lead to higher stock-based compensation
expenses or fluctuations in the valuations of vesting equity that cause variations in our stock-based retailer
incentive compensation; and
• changes in the political or regulatory environment affecting the banking or electronic payments industries
generally or prepaid financial services specifically.
The industry in which we compete is highly competitive, which could adversely affect our operating revenue
growth.
The prepaid financial services industry is highly competitive and includes a variety of financial and non-financial
services vendors. Our current and potential competitors include:
• prepaid card program managers, such as American Express Company, First Data Corporation, NetSpend
Holdings, Inc., AccountNow, Inc., PreCash Inc. and UniRush, LLC;
• reload network providers, such as Visa, Inc. (or Visa), The Western Union Company and MoneyGram
International, Inc.; and
• prepaid card distributors, such as InComm and Blackhawk Network, Inc.
Some of these vendors compete with us in more than one of the vendor categories described above, while others
are primarily focused in a single category. In addition, competitors in one category have worked or are working with
competitors in other categories to compete with us. A portion of our cash transfer revenues is derived from reloads to
cards managed by companies that compete with us as program managers. We also face actual and potential competition
from retail distributors or from other companies, such as PayPal and Visa, that have decided or may in the future
decide to compete, or compete more aggressively, in the prepaid financial services industry.
We also compete with businesses outside of the prepaid financial services industry, including traditional providers
of financial services, such as banks that offer demand deposit accounts and card issuers that offer credit cards, private
label retail cards and gift cards. These and other competitors in the larger electronic payments industry are introducing
new and innovative products and services, such as those involving radio frequency and proximity payment devices
(such as contactless cards), e-commerce and mobile commerce, that compete with ours. We expect that this competition
will intensify as our industry and the larger electronic payments industry continues to rapidly evolve.
Many existing and potential competitors have longer operating histories and greater name recognition than we
do. In addition, many of our existing and potential competitors are substantially larger than we are, may already have
or could develop substantially greater financial and other resources than we have, may offer, develop or introduce a
wider range of programs and services than we offer or may use more effective advertising and marketing strategies
than we do to achieve broader brand recognition, customer awareness and retail penetration. We may also face price
competition that results in decreases in the purchase and use of our products and services, particularly from GPR
card providers that offer comparable GPR cards to certain consumer segments. If price competition materially intensifies