Green Dot 2014 Annual Report Download - page 22

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. Similarly, some of our tax
preparation partners have developed or may seek to develop their own products and services that compete with our
tax refund processing services.
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 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 continue as the prepaid financial services industry and the larger banking
and electronic payments industry continues to rapidly evolve. We also expect to compete with businesses outside the
traditional tax refund processing services industry in the future as new entrants seek to develop software solutions
that may replace the need for our tax refund processing services.
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. 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 our tax preparation partners and decrease the prices of our
products and services, any of 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 or tax refund processing 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 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 our checking account
products 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.
Acquisitions or investments could disrupt our business and harm our financial condition.
We have in the past acquired, and we expect to acquire in the future, other businesses and technologies. The
process of integrating an acquired business, product, service or technology can create unforeseen operating difficulties,
expenditures and other challenges such as:
• increased regulatory and compliance requirements;
• regulatory restrictions on revenue streams of acquired businesses;
• implementation or remediation of controls, procedures and policies at the acquired company;
• diversion of management time and focus from operation of our then-existing business to acquisition integration
challenges;
• coordination of product, sales, marketing and program, and systems management functions;
• transition of the acquired company’s users and customers onto our systems;
• retention of employees from the acquired company;
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