Green Dot (NYSE:GDOT) jumped 40 percent today after the issuer of reloadable prepaid debit cards reached a new five-year deal with Wal-Mart Stores (NYSE:WMT) and authorizing a $150 million stock buyback.
Shares of Pasadena, California-based Green Dot rose to 21.39 at 2:46 p.m. in New York, the most since its July 2010 initial public offering.
Green Dot’s board authorized the repurchase of as much as $150 million of the company’s stock, subject to regulatory approval, the bank said today.
The new deal with Wal-Mart replaces Green Dot’s current agreement, which was scheduled to expire at the end of the year, according to a statement.
“To be chosen again as Wal-Mart’s partner against a wide field of fine competitors brings a wonderful feeling of accomplishment and satisfaction,” Green Dot Chief Executive Officer Steve Streit said in the statement.
Green Dot said the new contract with the biggest U.S. retailer took effect on May 1.
Green Dot has worked with Wal-Mart Stores since 2007 when the pair launched their MoneyCard program, a suite of reloadable prepaid cards.
Green Dot also worked with the retailer on last year’s rollout of a checking account service called GoBank, a mobile-first checking account that aims to serve the nation’s underbanked. GoBank doesn’t charge overdraft fees, unlike other the banks housed within the retail giant.
According to the Federal Deposit Insurance Corporation as of 2013 nearly 9.6 million American households, or one in 13, were unbanked. Another 24.8 million were underbanked, which means they had a bank account but also used services outside of the banking system.
When the MoneyCard made its debut, GE Capital Retail Bank was the issuing bank, while Green Dot was the program manager and service provider. The parties announced in 2013 that Green Dot Bank would take over as issuing bank.
GreenDot has faced competition from large lenders who have rolled out their own prepaid cards. The GoBank launch was part of an effort to branch out beyond underbanked consumers. Green Dot has increased its emphasis on technology like mobile payments, including the 2012 purchase of mobile location-based app developer Loopt.
Last year, Green Dot bought tax-refund processor Santa Barbara Tax Products Group for about $320 million.