How Netspend Makes Money

How Netspend Makes Money

Netspend makes money through a variety of fees on its prepaid cards

Fact checked by David Rubin
Reviewed by Samantha Silberstein

How Netspend Makes Money

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Netspend is a financial services company that offers prepaid debit cards. For consumers, these cards can act as an alternative to a bank account, credit cards, and cash. With a Netspend card, consumers can conduct transactions the same way they do with a bank debit card. Netspend offers Visa and Mastercard prepaid cards to its customers, and they can be used wherever Visa or Mastercard is accepted.

The company also offers prepaid business solutions, including tip solutions, a fintech platform, and payroll cards that let employers directly deposit paychecks into their employees’ card accounts. Netspend is a flagship brand of the financial services and technology company Ouro, headquartered in Austin, Texas.

Key Takeaways

  • Netspend is a financial services company that offers prepaid debit cards.
  • Netspend makes its money through a variety of fees, such as the monthly plan fee, transaction fees, ATM withdrawal fees, replacement card fees, and inactivity fees.
  • Netspend is one of the key players in the prepaid card industry; its competitors are JPMorgan Chase, Juice Financial, and American Express.
  • Netspend and Rêv Worldwide integrated into a new financial services and technology, Ouro, in 2023.

Netspend’s Industry

The prepaid card industry reached an estimated value of $3.6 trillion in 2024; it is expected to reach $21.5 trillion by 2034. The most popular type of prepaid card is a general-purpose card; the second most popular is gift cards. Prepaid cards allow the end-user to set their cost limit by their budget. Furthermore, prepaid cards can act as an alternative to cash, credit cards, and bank accounts, for both personal and business use, when users would prefer not to link a spending card to a credit or debit account.

The key drivers of growth in the industry are the increased desire for cash alternatives, the continuing growth of Internet users, and the ability to add funds to prepaid cards through a variety of methods (e.g. direct deposit).

The main companies operating in the space include American Express, Green Dot, JPMorgan Chase, Juice Financial, Mastercard, NetSpend, PayPal, Travelex Foreign Coin Services, and Visa.

State and federally regulated financial institutions partner with Netspend to issue the cards, which are insured by the Federal Deposit Insurance Corporation (FDIC). The cards allow consumers to add, spend, withdraw, and manage money.

Customers can access a variety of features, such as person-to-person bank transfers, direct deposit of employer or government checks, text alerts, a rewards program, budgeting tools, and a tiered-rate savings account option.

The company operates over 130,000 reload points, where consumers can purchase Netspend cards and load them with cash. The locations include retailers, check cashing locations, convenience stores, grocers, pharmacies, insurance providers, and tax preparation companies.

Netspend’s Fundraising and Financials

Netspend was launched with just $750 of seed capital in 1999. After four funding rounds over the following decade, which raised $5.3 million, the company raised $204 million in its 2010 initial public offering (IPO).

Netspend offers its customers two service plans: the pay-as-you-go plan and the monthly plan. The pay-as-you-go plan, which has no monthly fee, is for individuals who aren’t sure how often they’ll use the card per month and who primarily use the card to shop and pay bills. There is a $1.95 per purchase fee on all transactions.

Important

Netspend offers a range of financial solutions—program management, earned wage access, disbursements, and paycards—for an assortment of industries, including retail, restaurant and hospitality, construction, and workers in the gig economy.

The monthly plan is for individuals who use the card often and make many transactions per month, with the option of having the card funded via direct deposit. The monthly fee is $9.95 and there are no additional costs for transactions. There is a reduced monthly plan for $5 available to customers who make a total of $500 in payroll or government benefit direct deposits during the calendar month.

For domestic plans, Netspend charges $2.95 per automated teller machine (ATM) withdrawal, up to $3.95 for cash reloads, $0.50 for an ATM balance inquiry, and $5.95 per month if there is inactivity on the account after 90 days.

The company also charges fees for check requests, additional statements, additional card issuance, card replacement, ATM transaction decline fees, and expedited card delivery.

Netspend has served over 200 million customers and has over 130,000 reload locations.

History and Leadership

Netspend was founded in 1999 by Bertrand and Roy Sosa, a pair of immigrants from Mexico seeking a more effective way to pay bills and make online payments without needing to sign up for a credit card. The company went through four rounds of funding, followed by an IPO in 2010.

The company has partnered with a variety of companies throughout its history, including PayPal, Western Union, Major League Baseball (MLB), United Airlines, and Walmart. Netspend was acquired in 2013 by TSYS, which merged with Global Payments in 2019.

Netspend’s Recent Developments

Rêv Worldwide acquired Netspend from Global Payments for $1 billion in May 2023, returning control of Netspend to Bertrand and Roy Sosa, who also founded Rêv. Netspend and Rêv were combined into a new financial services and technology solutions parent company, Ouro, in November 2023.

What Is a Netspend Card?

A Netspend card is a prepaid card offered by Netspend. It is operated by Visa or Mastercard, but it is not linked to a credit or debit account. A customer orders a prepaid card with a specific amount of money on the card and can use it for a variety of transactions. Once the balance is depleted, a cardholder can reload the card with additional funds.

Where Can I Reload My Netspend Card?

There are a few ways to reload your Netspend card. A card can be reloaded through direct deposit from your paycheck or at a variety of reload locations, including CVS, 7-Eleven, Walmart, and Rite Aid locations, which can all be found through Netspend’s “Reload Location” finder on its website. Cards can also be loaded through bank transfers and PayPal.

What Is the Monthly Fee for Netspend?

Netspend offers two prepaid cards: a pay-as-you-go card with no monthly fee and a monthly fee card. The no-fee card charges $1.95 for every transaction while the monthly fee card costs $9.95 a month plus $0.50 for ATM balance inquiries and $2.95 for ATM withdrawals.

The Bottom Line

Netspend is a financial services company that offers prepaid debit cards to consumers as well as prepaid business solutions to companies, including tip solutions, a fintech platform, and payroll cards that let employers directly deposit paychecks into their employees’ card accounts. It is a flagship brand of the financial services and technology company Ouro, headquartered in Austin, Texas.

Netspend makes its money primarily through a variety of fees that it charges consumers for its prepaid cards, such as the monthly plan fee, transaction fees, ATM withdrawal fees, replacement card fees, and inactivity fees. As a key player in the hugely profitable prepaid card industry, Netspend competes with American Express, JP Morgan Chase, PayPal, and Juice Financial among others.

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