Marqeta Expands into Credit Cards Ahead of IPO

Marqeta Ventures into Consumer Credit Card Services

Marqeta is broadening its services to encompass the consumer credit card sector, aiming to facilitate the launch of credit card programs for various brands.

This strategic move follows closely after reports surfaced indicating Marqeta’s confidential filing for an initial public offering (IPO).

IPO Details and Recent Funding

Reuters estimates the potential value of the IPO to be approximately $10 billion. Marqeta is collaborating with Goldman Sachs and JPMorgan Chase to finalize the offering, with a targeted completion date around April.

Prior to this, in May of the previous year, Marqeta secured $150 million in funding at a valuation of $4.2 billion. Further investment came in October when Mastercard contributed an undisclosed sum to the company.

Marqeta’s Existing Platform and Growth

Marqeta provides essential tools for financial services platforms, enabling the issuance of cards, digital wallets, and other payment solutions. Notable clients include Cash App, Affirm, DoorDash, and Instacart.

By the close of 2020, Marqeta reported issuing 270 million cards via its platform, a significant increase from the 140 million issued at the end of 2019. The company currently operates in 35 countries and employs over 550 individuals.

Partnership with Deserve to Power New Initiative

Marqeta is now collaborating with Deserve, a startup specializing in financial technology, to drive its new credit card initiative.

Deserve’s Role in Program Management

According to Deserve CEO Kalpesh Kapadia, his company’s technology and open API platform will underpin Marqeta’s program management services. This includes origination, underwriting, bank and bureau integration, customer service, compliance, and risk management.

Jason Gardner, Marqeta’s founder and CEO, characterized the expansion into credit product development as a “major milestone” in building a “truly comprehensive card issuing platform, able to support any card type.”

Addressing Barriers to Innovation

Gardner explained that the complexity of the technology involved presented a barrier to entry, creating an opportunity for Marqeta to leverage its expertise. He stated, “We saw that this barrier to market had created an opportunity for us to take what we’ve learned helping customers innovate in the prepaid and debit space and adapt that to credit.”

He further noted that innovators seeking to launch modern card products have been hindered by reliance on outdated technology, limiting flexibility and personalization.

Demand for Digital Financial Solutions

The COVID-19 pandemic accelerated the adoption of touchless payments, as consumers increasingly favored in-person interaction and shopping. This surge in demand has fueled the need for more advanced digital financial offerings.

Marqeta’s new initiative aims to empower its customers to launch customized credit card products more rapidly, with enhanced controls and features.

Real-Time Customization and Digital Integration

Specifically, Marqeta will offer a modern credit system capable of adjusting account parameters – such as rewards, APR, and credit limits – in real-time based on predefined rules. Instant card activation upon approval and direct provisioning into digital wallets will also be available.

Deserve as a Strategic Partner

Gardner identified Menlo Park-based Deserve as “an ideal first strategic partner” in this expansion. He emphasized the company’s commitment to open APIs for faster market entry and its focus on innovators seeking to create cutting-edge card products.

“They are experienced in the credit card space, which has a unique set of requirements, and have a unique approach to underwriting,” Gardner added.

Deserve’s Growth and Capabilities

Deserve reports significant growth in its B2B sector, adding one prospective client each week and a new business partner monthly. Over the past three years, more than 1.5 million consumers have applied and interacted with its platform.

Currently, Deserve serves hundreds of thousands of customers, both directly and indirectly, processing tens of millions of dollars in transactions monthly.

Infrastructure Management for Leading Companies

Deserve manages the complete credit card infrastructure for companies like Sallie Mae in the cloud, handling applications and transactions for Sallie Mae credit card users. It also provides origination services to BankMobile and offers its entire credit card infrastructure to fintechs such as Opploans, BlockFi, and Earnest.

Kapadia stated, “Marqeta’s leading card-issuing platform paired with Deserve’s digital card expertise will enable further innovation in the credit industry and provide consumers with superior card experiences.”

He further noted, “The credit market is dominated by legacy technologies, high cost of operations and lack of customization and speed.”