Netspend

NetSpend

Roy Sosa, with brother Bertrand, cofounded Austin-based NetSpend, the nation’s largest prepaid debit card company. The Sosas, originally from Mexico, started NetSpend in 1999 when Roy, then a University of Texas at Austin student, was unable to buy a gift on the Internet because he didn’t have a credit card. He and his brother managed to build a $750 investment into a multimillion-dollar company with about 500,000 customers. There are currently around 30 million teenagers without credit cards and 40 million adults who are either unbanked or underbanked, meaning they may have a savings account but don’t have a checking account or a credit card. Sosa started out focusing on teens, but soon realized the need went way beyond. The majority of the people he helps are working Americans, generally 28 to 32 years old, and heavily minority. They’re typically renters with incomes between $35,000 and $50,000 a year.

Started in 1999 with $750, NetSpend has built its prepaid-card business by persuading banks to hold customers' deposits and by working with MasterCard and Visa to get merchants to accept the card. Sold at supermarkets, drugstores and check-cashing outlets, NetSpend's cards cost $9.95 up front, with either a $1 surcharge for each purchase or an $8 to $10 fee a month, all paid in cash. Such fees, which are standard among prepaid providers, have raised objections from consumer groups. But NetSpend and other companies say they charge less than competing services that their customers have long used, like check-cashing and money-transfer centers. Besides using the cards in stores, customers can withdraw cash at A.T.M.'s, pay bills online and have paychecks directly deposited. Last year, NetSpend's customers loaded $1 billion in cash onto their cards, which are sold primarily in the Southwest but are also available in New York, Illinois and Florida. The company, based in Austin, expects to double that volume this year.