The Evolution of Privacy.com: A Shift to Card Issuing with Lithic

Founded in 2014, Privacy.com initially aimed to empower users with the ability to generate virtual, disposable payment card numbers at no cost.

The primary objective was to safeguard users’ actual credit card information while providing a mechanism to revoke access for companies. In an era marked by frequent data breaches and credit card skimming attacks, Privacy.com significantly reduced the risk of exposing real credit card details to malicious actors.

Growing Adoption and a New Opportunity

The concept resonated strongly with consumers. By last July, Privacy.com had issued 5 million virtual card numbers following its $10.2 million Series A funding round. Currently, that figure has surpassed 10 million, as reported by CEO and co-founder Bo Jiang.

“Our mission was to establish the most secure and efficient method for online payments,” Jiang stated. “Our mobile application and browser extension enable users to create a unique virtual card for each online transaction.” This is particularly useful for managing subscriptions or controlling spending, such as limiting a child’s purchases on platforms like Fortnite.

Over time, the New York-based company recognized the inherent value in the technology underpinning its virtual card issuance. Following a year of beta testing, Privacy.com launched its Card Issuing API in 2020.

Introducing Lithic: A Focus on B2B

This API allowed corporate clients to issue payment cards to their customers, streamline internal operations, and simplify disbursement processes.

The rapid growth of this new platform, known as Lithic, prompted a strategic shift and a subsequent rebranding of the company.

The development of its consumer product led to the creation of substantial infrastructure for programmatically generating cards.

“Alongside established processors like Stripe, Adyen, Braintree, and Checkout, we concentrate on card creation and issuance, an area that has lagged behind card acquiring by five to seven years,” Jiang explained to TechCrunch. “We’ve developed extensive capabilities to support card creation internally and realized that numerous developers share this need.”

Series B Funding and Future Plans

Privacy.com officially announced its rebranding to Lithic and secured $43 million in Series B funding, led by Bessemer Venture Partners. This investment will be used to further develop its card issuing platform and solidify its B2B focus.

Index Ventures, Tusk Venture Partners, Rainfall Ventures, Teamworthy Ventures, and Walkabout Ventures also participated in the financing, bringing Lithic’s total funding to $61 million.

The original Privacy.com consumer product will continue to operate under its existing brand, powered by the Lithic card issuing platform.

Lithic's Competitive Advantage

Lithic is designed to simplify the process of programmatically creating both virtual and physical payment cards for developers. Jiang highlighted the platform’s early success, noting a tripling of enterprise issuing volumes in the past four months.

It competes with larger fintech companies like Marqeta and Galileo, but Lithic primarily targets early-stage startups.

“Marqeta focuses on enterprise clients and offers less developer-centric infrastructure. Galileo shares a similar approach,” Jiang noted. “As a younger company, we benefit from a more modern infrastructure, enabling us to reduce costs and respond more quickly to the needs of startups.”

Key Benefits of the Lithic Platform

Lithic’s “self-serve” platform offers several advantages, including the ability to “instantly” issue cards and access “accessible building blocks” – focused functionality allowing developers to select only the features they require.

Furthermore, developers can earn a percentage of interchange revenue generated by merchants. “Many companies aspire to build a more comprehensive in-house stack, and we provide a pathway for them to incorporate a payments component that can scale,” Jiang said.

The company generates revenue through per-card fees for Lithic API customers (with Privacy.com users being exempt) and interchange fees from both offerings.

Industry Validation and Future Growth

Charles Birnbaum, a partner at Bessemer Venture Partners, believes the transition from B2C to B2B is a strategic move. He views Lithic as a crucial component of the evolving embedded fintech and payments infrastructure.

“We’ve been impressed with the Privacy.com team and product from the start, but the strong organic growth of their developer platform over the past year convinced us to partner with them for this next phase,” he stated.

Mark Goldberg, a partner at Index Ventures, emphasized the increasing demand for online payments and card issuance as businesses across all sectors embrace fintech.

“Lithic stands out as a developer-friendly solution – it’s fast, powerful, and remarkably easy to implement,” he said. “Customers have reported launching with Lithic in the same timeframe it takes competitors to simply return a phone call.”

Lithic intends to utilize the new funding to expand its tools and technology for developers issuing and managing virtual cards, as well as to enhance its existing Privacy.com offering.