"The big problem Green Dot has is that their retail partners that were previously exclusive are now putting other cards on the shelf," he says. "I would say they need to find new channels to make up for the lost shelf space in their existing retail channel."
To combat those diminishing returns, Green Dot is starting a series of initiatives announced Thursday in advance of its earnings release. They include a partnership with Russell Simmons' prepaid card company, UniRush, under which Green Dot will bring UniRush's RushCard into retail stores.
And Green Dot is planning a commercial bank account attached to a debit card that will launch sometime in the next year.
The company said it has already begun the first phase of beta testing for a new "mobile-centric" checking account. Green Dot says those accounts will most likely be rolled out before the end of the year. At the same time, in order to hedge against fraud, the company is implementing a new risk management system designed to stop crooks from misusing its prepaid cards. That measure could also prevent some of Green Dot's new customers from activating its cards.
But the crux of Green Dot's business model has been its exclusive relationships with retailers, and, on the earnings call, Streit said that is still true to some extent.
"We're talking about things that might happen in the future, but here's the challenge that we face as an organization that needs to respond to the conditions," said Streit. "If you have large companies offering millions of millions of dollars to get on the rack with a product, I have a couple of choices. I can keep paying higher fees, we can keep trying to someway artificially block that, or we can say: 'Look, let's do the research on the product, let's see what our sell through would be, let's see what the optimum pricing is, and then compete in the marketplace and let that settle out and move onto the next thing."