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Prepaid Program Manager Bank Freedom Announces It Will Leave Issuer MetaBank

Mercator Advisory Group by Mercator Advisory Group
March 29, 2011
in Analysts Coverage
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Big Data And The Art Of Personalized Banking - PaymentsJournal

e-banking concept: young woman with online bank application phone at the park

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Bank Freedom, a prepaid card program manager, has announced that it will leave its current prepaid card issuer, MetaBank, and look for a new issuing bank. While Bank Freedom says that this move is driven by a desire to cut costs, it is no secret that MetaBank has come under fire from the Office of Thrift Supervision for its iAdvance small-dollar loan product and for its third party relationships in its prepaid programs.

“In 2010 we switched processors to reduce our processing costs. Our business model since inception has been to offer consumers innovative prepaid card programs with low pricing and robust features. By switching issuing banks we can further reduce our cardholder fees without decreasing our profit margins,” stated Bruce Berman, CEO of Bank Freedom.

While the move may indeed by driven by costs, it seems impossible that the regulatory issues had nothing to do with the decision. While MetaBank is facing scrutiny, it seems too soon to count it out of the business, especially as no final order has been issued by the Office of Thrift Supervision. The move does raise the question of whether or not Bank Freedom is the first of many who will leave MetaBank.

Read the full press release at: http://www.businesswire.com/news/home/20110328005382/en/Prepaid-Debit-Card-Company-Bank-Freedom-Leaving

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