Green Dot 2012 Annual Report Download - page 25

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our sales and marketing expenses, any of which would likely seriously harm our business, operating results and
financial condition. 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 other traditional banks, such as J.P. Morgan Chase & Co.,
that have recently entered the prepaid card market;
• 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. In particular, our recently-introduced GoBank product is designed to compete directly
with banks by providing products and services that they have traditionally provided. 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 the prepaid financial services
industry and the larger banking and 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 could experience
increased price competition as we are facing increased competition with a greater number of offerings from existing
competitors and new market entrants at the stores of many of our retail distributors. If this happens, we expect that
the purchase and use of our products and services would decline in the near term and farther into the future. If price
competition materially intensifies, we may have to increase the incentives that we offer to our retail distributors and
decrease the prices of our products and services, any which would likely adversely affect our operating results.
Our long-term success depends on our ability to compete effectively against existing and potential competitors
that seek to provide prepaid cards or other electronic payment products and services. If we fail to compete effectively
against any of the foregoing threats, our revenues, operating results, prospects for future growth and overall business
could be materially and adversely affected.
We make significant investments in new products and services that may not be successful.
Our prospects for growth depend on our ability to innovate by offering new, and adding value to our existing,
product and service offerings and on our ability to effectively commercialize such innovations. We will continue to make
significant investments in research, development, and marketing for new products and services, including GoBank
and other mobile or banking products arising out of our acquisitions or otherwise. Investments in new products and
services are speculative. Commercial success depends on many factors, including innovativeness, price, the
competitive environment and effective distribution and marketing. If customers do not perceive our new offerings as
providing significant value, they may fail to accept our new products and services, which would negatively impact our
operating revenues. We may not achieve significant operating revenues from new product and service investments
for a number of years, if at all. Moreover, new products and services may not be profitable, and even if they are
profitable, operating margins for new products and services may not be as high as the margins we have experienced
in the past.