Tuesday, November 30, 2010
Payment Data Systems Inc, the parent company of prepaid card processor FiCentive Inc., said in a Securities and Exchange Commission filing that it is in the process of ending its bank sponsor partnership with Meta Financial Group Inc. subsidiary MetaBank. The Nov. 17, 2010, filing stated that MetaBank's payment division, Meta Payment Systems, informed Payment Data Systems it was terminating its participation in FiCentive's prepaid card programs effective May 11, 2011.
Therefore, Payment Data Systems said it had begun the process of attaining a new issuing bank that would allow the San Antonio-based processor to continue to provide prepaid cards. But the processor added if it were unable to obtain another issuer to service its prepaid card programs, that it could have a "material adverse effect on our results of operations and financial condition."
In the filing, Payment Data Systems said MetaBank was terminating its third-party agreement because it could not get permission through the Office of Thrift Supervision, a federal bank regulation agency, to enter into a new agreement with Payment Data Systems.
In October 2010, SellingPrepaid reported on the troubles of MetaBank in connection with the iAdvance loan program it was offering through NetSpend Holdings Inc.'s prepaid cards. (see "MetaBank's troubles affect NetSpend," SellingPrepaid, Oct. 15, 2010.) According to an SEC filing, NetSpend said the OTS determined that MetaBank engaged in "unfair or deceptive acts or practices in connection with its operation of the iAdvance program" and ordered MetaBank to discontinue the program.
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