Last week our friends at Green Dot finally filed for an IPO.  This is exciting news in a recessionary environment, but especially for a company which has seen significant growth during this recession.  Green Dot’s revenues have roughly doubled every year since 2007, as did their operating income.  The JP Morgan/Morgan Stanley led offering is also exciting news for the underbanked financial services and prepaid industries, which Green Dot has played an important part in building.  Yeah, yeah, who cares?

So what does it mean?  Well, first I’m curious what they will do with the money.  The filing is quite oblique on this of course, but I would guess that now is a good time for Green Dot to expand its leadership beyond its one key vertical: retail and/or to enter the “other” side: credit.

General Purpose Reloadable (“GPR” in the jargon) cards, the kind Green Dot markets, are basically debit cards with a Visa or Mastercard logo on them and act like your or my bank debit card.  Except there’s no overdraft and you don’t get them at a bank, which is good if you don’t like or trust overdraft or banks (which is a growing trend these days; not to mention au courant turf for regulators).

GPR distribution has grown to several meaningful verticals: retail, where Green Dot rules; AFS (check cashers, payday, etc), where Green Dot’s nemesis Netspend rules; payroll, where lots of bank offerings, like eCount or Elan rule; tax prep, where H&R Block’s Emerald Card rules; and online, where AccountNow rules.   My guess is that Green Dot will acquire the leader in one or several of these vertical.

There is, of course, ample opportunity for them to expand into other parts of prepaid, like gift, benefits, loyalty, etc.  And the company is equipped to do so.  But I would guess that management will see greater opportunity to further exploit its hard-won expertise in serving the underbanked and therefore stick with GPR.

The other big area I can see Green Dot expand into with its aspired $150mm is into lending.  They don’t have major players like Ace and Dollar and Cash America to offend, and they have experimented with small credit pilots for years.  I think there is a big opportunity to re-invent payday, or really short-term, small dollar lending.  If Green Dot are to bring their big retail partners  (Wal-Mart and Walgreens) along, they had better do so in a squeaky clean way, which will be good for the consumer and perhaps the DC finance “reformers” will dig it as well.  In this economy, having access to affordable lending capital is virtually unheard of.  It presents a unique – and large opportunity for a Green Dot.