Back-end processor TSYS finalized their acquisition of prepaid card firm NetSpend on July 1 as TSYS completed the $1.4 billion transaction and NetSpend was delisted from the stock exchange. The acquisition was first announced in February of this year.
NetSpend, a provider of general purpose reloadable (GPR) cards, had over 3 million active accounts with 1.7 million of these accounts using direct deposit at the time of the acquisition. Through this acquisition TSYS was looking to be closer to the consumer and the point of transaction. TSYS, which was originally spun off from Synovus Financial Corp, wanted to move beyond processing transactions and into the prepaid space directly.
The prepaid market has experiences large growth in recent years, especially as the debit interchange cap led to more banking fees pushing more consumers to prepaid cards in place of checking accounts. NetSpend and GreenDot were considered pioneers of the prepaid card space, but the market has recently became much more crowded with established financial institutions and card associations entering the burgeoning prepaid market as well.
TSYS will operate NetSpend as a standalone business while NetSpend’s CEO Dan Henry will continue to manage it. TSYS processes credit, debit and other payments in 80 countries, and utilizing this experience in international markets NetSpend will expand globally.
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