The Federal Reserve Board and Utah Department of Financial Institutions have both signed off the acquisition, paving the way for Green Dot to become a bank holding company.

Green Dot currently sells general-purpose reloadable pre-paid cards through national retail chains and online that are issued by third-party banks that maintain accounts on behalf of the firm's customers.

The company plans to rename Bonneville Green Dot Bank and use it to issue its own cards linked to FDIC-insured accounts and provide settlement services.

However, a major contract that sees cards issued through GE Money and sold at WalMart stores will not be affected.

Steve Streit, CEO, Green Dot, says: "This acquisition will give us the flexibility to better control our own destiny, by allowing us to create products that best suit the needs of our current and future customers. This allows us to become a bank truly dedicated to serving the needs of the large and growing population of consumers who are looking for a better way to bank."

The Fed Board voted four to one to approve the deal, with Governor Elizabeth Duke dissenting because "companies with narrow business plans face risks that are different than those faced by more diversified companies and are more vulnerable to unexpected shocks".

Shares in Green Dot closed up 7.7% at $29.62 yesterday.