In previous seasons of the show hosted by supermodel Heidi Klum on the Lifetime cable channel, designers were given envelopes of cash for each challenge. At the beginning of season 12, each designer was given $4,000 loaded into GoBank accounts to be used for the duration of the season. The GoBank accounts are also being used to make person-to-person money transfers between contestants when they share expenses for team challenges.
"Project Runway teaches designers the skills they need to launch their own collections," said Sharon Pope, Chief Marketing Officer at Green Dot. "Part of that is managing your business expenses."
When GoBank was launched in June 2013, Green Dot touted the new mobile banking product as a reinvention of the traditional checking account. Among the features of GoBank is the ability to access account balances (the most common mobile banking behavior) without having to log in to accounts, and Fortune Teller, a budgeting tool of the mobile app that alerts users when purchases are not affordable within available balances.
In a related development, Green Dot signed surfer Bethany Hamilton to promote GoBank. As a teenager, Hamilton lost her arm in a shark attack while surfing, but returned to competition. Her life story was made into the 2011 film "Soul Surfer."
An online survey conducted by Bovitz Inc. in June 2013 for Green Dot affirms the Pasadena, Calif.-based company's higher public profile. Of 458 individuals between the ages of 21 and 45 who frequent check cashing stores, 54 percent had heard of Green Dot, while runner-up NetSpend was recognized by 36 percent. According to the survey, Green Dot was also considered the best brand, with the best consumer protections, the easiest features to use and the most likely card to get. Additionally, Green Dot cards are perceived as having the lowest associated costs.
In its July 30, 2013, executive summary, Green Dot provided evidence that the perception is reality. The company said that the average monthly fees incurred by users of Green Dot cards total $4.37, while the fees on the cards of its nearest competitor NetSpend average $10.28 per month.
When it comes to overdraft and nonsufficient funds (NSF) fees charged to consumers, there apparently is no comparison. Green Dot said it does not charge its cardholders such fees, while it estimated that NetSpend charged its cardholders between $25 million and $35 million in overdraft and NSF fees in 2012.
In a Seeking Alpha transcript of the Q2 earnings conference call, Green Dot Chief Executive Officer Steve Street said, "Our strong conviction is that charging overdraft fees and especially charging such fees to low-income Americans is wrong. And so for that reason, Green Dot does not do it."
Streit noted that Green Dot has embarked on a new campaign called Project Outreach to raise the company's awareness among inner city neighborhoods. Through Green Dot (the program manager and processor) and its card issuing bank, Green Dot Bank, the company seeks to offer Federal Deposit Insurance Corp.-backed prepaid debit cards and other types of banking products to low-income individuals in those neighborhoods. "We believe Americans living in the country's inner cities desperately need safe, regulated bank accounts that inexpensively satisfy the core banking needs that everyone requires to conduct their daily life," Streit said.
Streit pointed out that the majority of Green Dot's products are concentrated in the stores of "main street retailers," such as Wal-Mart Stores Inc. locations. "[T]hese retailers generally do not have a high concentration of locations in the inner city," he said. "So despite Green Dot's size and notoriety in the prepaid industry, our products have generally not been as available for acquisition and reloading in the heart of where many potentially high-quality customers live and work."
Green Dot's strategy centers on distribution of its products via check cashing stores, which are often located in inner-city neighborhoods. "[W]e are excited by the opportunity to partner with these chains, both because it expands our mission to reinvent personal banking for the masses and it helps us serve the customers who we're trying to reach," Streit said.
Green Dot intends to make its cards available in approximately 20,000 check cashing locations across the United States. The campaign began with the rollout of Green Dot products via three check cashing chain stores in New York City. "Of course, there's always uncertainty when you enter a new channel and it's hard to tell exactly how well our products will sell in check cashing locations," Streit said. "But we believe that Green Dot has a strong chance of becoming the leading prepaid card provider in this channel."
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