Green Dot 2015 Annual Report Download - page 27

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U.S. GAAP requires us to assign and then test goodwill at the reporting unit level. If over a sustained period of
time we experience a decrease in our stock price and market capitalization, which may serve as an estimate of the
fair value of our reporting unit, this may be an indication of impairment. If the fair value of our reporting unit is less
than its net book value, we may be required to record goodwill impairment charges in the future. In addition, if the
revenue and cash flows generated from any of our other intangible assets is not sufficient to support its net book value,
we may be required to record an impairment charge. The amount of any impairment charge could be significant and
could have a material adverse impact on our financial condition and results of operations for the period in which the
charge is taken.
If we are unable to keep pace with the rapid technological developments in our industry and the larger
electronic payments industry necessary to continue providing our network acceptance members and
cardholders with new and innovative products and services, the use of our cards and other products and
services could decline.
The electronic payments industry is subject to rapid and significant technological changes, including continuing
advancements in the areas of radio frequency and proximity payment devices (such as contactless cards), e-commerce
and mobile commerce, among others. We cannot predict the effect of technological changes on our business. We rely
in part on third parties, including some of our competitors and potential competitors, for the development of, and access
to, new technologies. We expect that new services and technologies applicable to our industry will continue to emerge,
and these new services and technologies may be superior to, or render obsolete, the technologies we currently utilize
in our products and services. Additionally, we may make future investments in, or enter into strategic alliances to
develop, new technologies and services or to implement infrastructure change to further our strategic objectives,
strengthen our existing businesses and remain competitive. However, our ability to transition to new services and
technologies that we develop may be inhibited by a lack of industry-wide standards, by resistance from our retail
distributors, network acceptance members, third-party processors or consumers to these changes, or by the intellectual
property rights of third parties. Our future success will depend, in part, on our ability to develop new technologies and
adapt to technological changes and evolving industry standards. These initiatives are inherently risky, and they may
not be successful or may have an adverse effect on our business, financial condition and results of operations.
We face settlement risks from our retail distributors, which may increase during an economic downturn.
The majority of our business is conducted through retail distributors that sell our products and services to consumers
at their store locations. Our retail distributors collect funds from the consumers who purchase our products and services
and then must remit these funds directly to accounts established for the benefit of these consumers at the banks that
issue our cards. The remittance of these funds by the retail distributor takes on average two business days. If a retail
distributor becomes insolvent, files for bankruptcy, commits fraud or otherwise fails to remit proceeds to our card issuing
bank from the sales of our products and services, we are liable for any amounts owed to our customers. As of
December 31, 2015, we had assets subject to settlement risk of $69.2 million. Given the possibility of recurring volatility
in global financial markets, the approaches we use to assess and monitor the creditworthiness of our retail distributors
may be inadequate, and we may be unable to detect and take steps to mitigate an increased credit risk in a timely
manner.
Economic downturns could result in settlement losses, whether or not directly related to our business. We are not
insured against these risks. Significant settlement losses could have a material adverse effect on our business, results
of operations and financial condition.
Economic, political and other conditions may adversely affect trends in consumer spending.
The electronic payments industry, including the prepaid financial services segment within that industry, depends
heavily upon the overall level of consumer spending. If conditions in the United States become uncertain or deteriorate,
we may experience a reduction in the number of our cards that are purchased or reloaded, the number of transactions
involving our cards and the use of our reload network and related services. A sustained reduction in the use of our
products and related services, either as a result of a general reduction in consumer spending or as a result of a
disproportionate reduction in the use of card-based payment systems, would materially harm our business, results of
operations and financial condition.
Our business is dependent on the efficient and uninterrupted operation of computer network systems and
data centers.
Our ability to provide reliable service to customers and other network participants depends on the efficient and
uninterrupted operation of our computer network systems and data centers as well as those of our retail distributors,
network acceptance members and third-party processors. Our business involves movement of large sums of money,
processing of large numbers of transactions and management of the data necessary to do both. Our success in our