Green Dot Corp. executives played up their “banking-as-a-service” platform Wednesday as the company reported strong second-quarter growth in most of its business lines, but they said little about the support they provide for Apple Inc.’s Apple Pay Cash service.
Pasadena, Calif.-based Green Dot supplies the virtual prepaid card that customers of Apple’s person-to-person payments service use for funding. Neither Apple nor Green Dot have disclosed detailed metrics about the program, which is a newer entrant in the hot P2P market that includes PayPal Holdings Inc.’s Venmo, the bank-sponsored Zelle, Square Inc.’s Cash app, and Alphabet Inc.’s Google Pay Send.
“Apple Pay Cash continues to grow very nicely, and while program revenue isn’t expected to be material, Apple Pay Cash already is serving millions of customers across the U.S. less than eight months since its launch,” Green Dot president and chief executive officer Steven W. Streit said on a late-afternoon conference call with analysts.
Streit’s comments deviated little from the remarks Apple CEO Tim Cook made about the P2P service at Apple’s July 31 earnings call.
Apple Pay Cash is part of Green Dot’s banking-as-a-service (BaaS) platform—Streit and chief financial officer Mark Shifke pronounced “BaaS” as “bass,” like the fish—that offers financial services through the company’s Green Dot Bank subsidiary. BaaS partners can offer prepaid and deposit accounts, mobile banking, rewards programs, and related services. Besides Apple, users include accounting software developer Intuit Inc., ride-share giant Uber Inc., and Walmart Inc.
Intuit uses the platform to offer financial services to its TurboTax users, while the Uber program, which includes a GoBank Visa debit card, enables drivers to receive funds in a Green Dot Bank account. Streit said the TurboTax program is seeing “wonderful results,” and Uber’s program is getting more usage from new as well as existing drivers.
Growth in the Intuit and Uber programs is one reason why Green Dot reported having 5.86 million active accounts at the second quarter’s end, up 14% from 5.15 million a year earlier. Those numbers do not include Apple Pay Cash. Some 500,000 new accounts are provisioned for direct deposits.
Green Dot is now getting about half its revenue growth through BaaS programs, and half from its traditional prepaid products typically sold in stores. Streit said BaaS’s future is bright because partners can design highly individualized programs with it, and so far Green Dot has not put a major marketing effort behind it. “There’s a lot of opportunity for BaaS,” he said.
Other second-quarter metrics included gross dollar volume of $9.41 billion on Green Dot cards and accounts, up 25% from a year earlier, and purchase volume of $6.33 billion, a 21% increase. Cash transfers grew 11% to 10.6 million, while tax refunds processed totaled 2.79 million, up 16%.
Green Dot reported net income of $29.8 million, a 55% increase from $19.3 million in 2017’s second quarter, on operating revenues of $258.3 million, up 16% from $222.5 million a year ago.