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Banking Interpretations

NYSBL 640

October 15, 2008

Judith Rinearson, Esq.
Bryan Cave
1290 Avenue of the Americas
New York, NY 10104-3300

Re: GE Money Bank ("GEMB")/Wal-Mart Prepaid Card Program

Dear Ms. Rinearson:

I am writing in response to your licensing inquiry regarding Wal-Mart's plan to distribute Wal-Mart branded prepaid debit cards ("WM Prepaid Cards") in its stores located in New York State ("New York Location(s)"). The WM Prepaid Cards will be issued by GEMB which is a federal savings association with its principal place of business in Salt Lake City, Utah. In addition, Wal-Mart plans to provide load and reload services for WM Prepaid Cards as well as for Green Dot prepaid debit cards ("GD Prepaid Cards"). Wal-Mart will also sell Green Dot MoneyPak cards ("MoneyPak Cards") at its New York Locations which can be used, among other things, to reload WM Prepaid Cards and GD Prepaid Cards. GD Prepaid Cards and MoneyPak Cards are issued by Columbus Bank & Trust Company ("CB&T"), a Georgia chartered state bank.

As was explained in correspondence and during conversations had on this matter, Wal-Mart entered into an agreement with GEMB to provide the WM Prepaid Card at its New York Locations and elsewhere. Under the agreement, GEMB agreed to issue and service reloadable WM Prepaid Cards that bear the Wal-Mart name, as well as the VISA name and trademark, and the Green Dot name and trademark. Wal-Mart will market and distribute the WM Prepaid Cards and will accept funds for loading on such cards. Green Dot will make available certain financial products through which Wal-Mart customers will be able to load funds on the WM Prepaid Cards and GO Prepaid Cards.

GEMB appointed Wal-Mart as its agent for the purposes of marketing and distributing WM Prepaid Cards. CB&T appointed Wal-Mart as its agent for the purpose of loading/reloading WM Prepaid Cards, selling MoneyPak Cards, and reloading GO Prepaid Cards. Further, CB&T appointed Wal-Mart as its agent for delivering to CB&T funds received in connection therewith, including fees (exclusive of GEMB fees).

Sale of WM Prepaid Cards

Wal-Mart plans to offer WM Prepaid Cards to customers at the New York Locations, including at point-of-sale terminals. Customers will purchase the cards by paying a fee to GEMB and providing funds to make an initial load on a WM Prepaid Card. A temporary non-reloadable card will be issued at that point and activated upon GEMB completing identification verification on the cardholder. GEMB will issue a personalized WM Prepaid Card upon completion of the identification verification and transfer the balance on the temporary card to a prepaid card account maintained by GEMB in the cardholder's name.

Adding Value to WM Prepaid Cards

WM Prepaid Cards may be reloaded in-store by either a swipe reload or a reload facilitated by the purchase of a MoneyPak Card.

Swipe Reloads

When a cardholder wants to reload a WM Prepaid Card using the swipe method, a cashier at a New York Location will collect the funds to be reloaded and swipe the cardholder's WM Prepaid Card in a machine designed to provide GEMB (through the Green Dot network) with the card number and the value to be added. GEMB will determine if the funds may be added to the WM Prepaid Card based on balance limits. If a reload is approved, the WM Prepaid Card will be immediately loaded and the cardholder credited for the full amount of the load.

MoneyPak Reloads

Cardholders of WM Prepaid Cards wanting to reload them may do so by purchasing a MoneyPak Card at a New York Location.1 A Money Pak Card is a temporary place for a cardholder to hold a specific amount of funds for the purpose of making a transfer of such funds, for example, to a WM Prepaid Card. MoneyPak cards can be loaded once in an amount up to $ 1100. Once a MoneyPak Card is purchased, a cardholder must contact Green Dot's interactive phone system or visit Green Dot's website in order to provide the information needed to apply MoneyPak funds to a WM Prepaid Card.

Green Dot assists CB&T with the distribution of MoneyPak Cards through retailers such as Wal-Mart who are not affiliated with CB&T or Green Dot. Furthermore, Green Dot assists CB&T with the management of the Money Pak Card program. CB&T retains full control of, and oversight for, the MoneyPak Card program. With respect to the services that Green Dot provides for the MoneyPak Cards, CB&T has appointed Green Dot as its agent.

When a customer purchases a MoneyPak Card at a point-of-sale terminal in a New York Location, information regarding the purchase of the card and the amount loaded on it will be sent electronically to GEMB. GEMB will then forward the information to Green Dot, on behalf of CB&T.

Adding Value to GD Prepaid Cards

Swipe Reloads

Cardholders of GO Prepaid Cards issued by CB&T will also be able to reload their cards at point-of-sale terminals at the New York Locations using the swipe method. A cashier will swipe the GO Prepaid Card and indicate the amount of funds to be loaded. A message indicating this information will be sent electronically to GEMB. GEMB will then forward this message to CB&T. CB&T will determine whether funds may be added on the card based on balance limits and will send back an authorization message. Once authorization for the load is given, the GO Prepaid Card will be immediately loaded with the value added.

GD Prepaid Card Money Pak Reload

Cardholders of GD Prepaid Cards will be able to reload them by purchasing a MoneyPak Card at a New York Location. The process for this type of reload is the same as that described above for a MoneyPak Card reload on a WM Prepaid Card.

Flow of Funds

A. Sale of WM Prepaid Cards, Initial Loads and Swipe Reloads

Cardholder funds received for fees, initial loads, and swipe reloads of WM Prepaid Cards will be deposited daily into a GEMB reserve account held at JP Morgan Chase New York, titled as "GE Money Bank Wal-Mart Funding". The funds will be swept on a daily basis into GEMB's operating account held at JP Morgan Chase New York, titled as "GE Money Bank Wal­Mart Activity". Next, GEMB will wire, each day, all of the funds received for the loads on the WM Prepaid Cards and fees, excluding those due to GEMB, from its operating account to CB&T's Retailer Reserve Account held at CB&T. This account is titled "CB&T as Trustee and Fiduciary for Green Dot Cardholder Incoming Retailer Funds". Each night all of the funds in CB&T's Retailer Reserve Account will then be transferred to the CB&T Operating Account held at CB&T. All of the funds in the Operating Account, except for customer fees, will be held by CB&T as Trustee and Fiduciary for Green Dot Cardholders Operating Account. Funds received for initial loads and swipe reloads will be held in this account until the WM Prepaid Cards are activated. Once activated, the funds will be transferred back to GEMB's operating account held at JP Morgan Chase. The funds are to be held in this account for merchant transactions posted each day and will be debited by VISA for purchases made using a WM Prepaid Card to be processed on the VISA debit card platform.

B. Swipe Reloads on GD Prepaid Cards

Cardholder funds received at New York Locations for swipe reloads on GD Prepaid Cards will flow as described above in Flow of Funds section A, up and until the point when such funds are transferred into the CB&T Operating Account. Funds received for swipe reloads on GD Prepaid Cards will be held in the CB&T Operating Account and remain there until swept by CB&T to the CB&T Funding Account held at CB&T. Funds in this account will be held by CB&T as Trustee and Fiduciary for Green Dot cardholders. Once a Green Dot Prepaid Card is used, the funds held in the Funding

Account will be transferred to the appropriate VISA settlement account held at CB&T. Funds maintained in the settlement accounts will be held by CB&T as Trustee and Fiduciary for Green Dot Cardholders. Funds held in the settlement accounts will remain there until merchant transactions are posted daily to be debited by VISA for purchases made using a GD Prepaid Card to be processed on the Visa debit card platform.

MoneyPak Reloads

Funds received for purchases of MoneyPak Cards at New York Locations, if ultimately activated to be applied to a WM Prepaid Card, will flow as described above in Flow of Funds section A. On the other hand, funds received at New York Locations for purchases of MoneyPak Cards, if ultimately activated to be applied to a GD Prepaid Card or some other bank issued prepaid card, will flow as described above in Flow of Funds section B.

Liability for Funds

As was represented to the State of New York Banking Department ("Department"), CB&T appointed Wal-Mart as its agent for the purpose of loading/reloading WM Prepaid Cards, selling MoneyPak Cards, and reloading GD Prepaid Cards. Further, CB&T appointed Wal-Mart as its agent for delivering to CB&T funds received in connection therewith, including fees (exclusive of GEMB fees). Consequently, CB&T will be fully liable to every cardholder for funds paid for the loading/reloading of WM Prepaid Cards, the sale of MoneyPak Cards and reloading of GD Prepaid Cards from the time such funds are received at a New York Location and during the time that these funds are maintained in the CB&T accounts previously described. Therefore, if funds are not remitted for any reason from Wal-Mart to CB&T, any dispute or resolution regarding the failure to remit funds would only be between CB&T and Wal-Mart.  Moreover, the failure of Wal-Mart to remit the funds to CB&T, or the failure of CB&T to remit the funds to GEMB for activated WM Prepaid Cards would never be a basis for withholding cardholder funds.

With respect to customer funds received for WM Prepaid Card loads and reloads, as detailed above, since upon activation those funds will then be transferred from a CB&T account (CB&T Operating Account) back to GEMB's operating account (GE Money Bank Wal-Mart Activity account), it is at that point that CB&T's liability will end.

In addition, it has been represented to the Department by GEMB that under the Cardholder agreement, GEMB is also responsible to the Cardholders for any funds loaded or reloaded on the WM Prepaid Cards.

GEMB remains liable until those funds are debited by VISA for transactions paid for using a WM Prepaid Card to be processed on the VISA credit card platform.

Opinion

The Department reviewed and considered the information discussed above regarding the GEMB/Wal-Mart Prepaid Card Program, including that with respect to the operation of the program, and the roles and responsibilities of GEMB, CB&T, Wal-Mart and Green Dot regarding the same. Based on its review, the Department has determined that Wal-Mart does not require a money transmission license as contemplated under Article 13-B of New York's Banking Law in order to conduct the proposed GEMB/Wal-Mart Prepaid Card Program business at New York Locations since Wal-Mart will operate as an agent of GEMB and CB&T in doing so.

Thank you for all of your efforts in this matter and if you have any questions I can be reached at (212) 709-1650.

Sincerely,

Christine R. Cardi
Assistant Counsel

cc:     Deputy Superintendent Regina Stone
          NYBD -LFSD

_____________________

1     MoneyPak Cards can be purchased at Wal-Mart and other retailer locations for the purpose of facilitating a reload on a WM Prepaid Card and certain other bank issued prepaid debit cards.

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