Marqeta Is Gunning for the Massive Credit Card Industry

Marqeta operates a next-generation debit and credit card platform. As a testament to its success, the company has landed on CNBC’s Disrupter’s 50 list at the No. 33 spot. And yes, Marqeta stock has been rising quickly. The valuation is at about $4.3 billion.

A businessman holds a holographic logo that says "private equity."

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Jason Gardner founded the company during the financial crisis. He saw an opportunity to leverage cloud computing technologies to make it easier for developers to build systems to launch new financial products. According to Gardner: “Marqeta runs 24/7, 365 days a year. If we don’t operate near perfect, our customers suffer. We take that responsibility as mission critical.”

Before this, he started several other technology ventures, such as Vertical Think and PropertyBridge. Consider that he sold PropertyBridge to Moneygram International (NASDAQ:MGI) in 2004.

What It Is

The fintech market is large and growing quickly. Many startups see opportunities to disrupt traditional financial services companies.

But this requires handling complex technologies for legacy systems. After all, there are still many banking applications that rely on mainframe computers and the COBOL computer language.

So with Marqeta, it has built tools to help streamline the process. Here are some of the main parts of the platform:

  • Card Issuing: You can customize virtual and physical cards, such as with colors, visuals and branding. It’s even possible to use blockchain tokenization to help with fraud mitigation for digital wallets.
  • Processing and Settlement: Marqeta allows for the necessary requirements for card management like authentication, spend controls and just-in-time funding, which allows for authorizing in real time.
  • Risks Systems: These are robust. The platform leverages data in real-time to detect anomalies and issues.
  • APIs (Application Programming Interfaces): These are webservices that make it easy to embed Marqeta technology in third-party apps.
  • Alerts and Reporting: You can setup dashboards for tracking and analysis of card activities.

Note that the company has been building a global footprint. To this end, Marqeta is certified to process payments in Canada, Europe, Australia and ten countries in APAC (Asia-Pacific).

As for the market opportunity, it is certainly enormous. According to Marqeta’s own analysis, the total addressable market – on a global basis – for its platform is a whopping $45 trillion. It is also forecasted to hit $80 trillion within the next decade.  All in all, there is quite a bit of runway for growth for the company.

Bottom Line on Marqeta Stock

The private investing markets for fintech operators has remained red hot. In late May, Marqeta announced a $150 million funding. The round was led by Coatue with participation from Vitruvian Partners. Some of the other investors from prior rounds included Visa (NYSE:V), Goldman Sachs (NYSE:GS), 83North, Granite Ventures, and ICONIQ Capital.

Keep in mind that last year the company issued more than 140 million cards. Marqeta also has a marque customer list, with companies like Uber (NYSE:UBER), Square (NYSE:SQ), Affirm and DoorDash.

So then when might investors have a chance to buy Marqeta stock — say via an IPO (Initial Public Offering)? Well, that was the plan this year. But unfortunately, with the impact of the novel coronavirus, the company had to postpone this.

Yet this may ultimately prove temporary. The pandemic has actually led to the acceleration of business. For example, in late July Marqeta announced a partnership with JPMorgan (NYSE:JPM) to provide virtual cards. According to the company’s head of commercial cards, John Skinner, in an interview with “We know there’s a need for this product — what Covid has taught us is that there’s more use cases for this than we imagined.”

In other words, as the IPO market goes into the fall, a deal from Marqeta may indeed be in the cards.

Tom Taulli (@ttaulli) is an advisor/board member for startups and author of various books and online courses about technology, including Artificial Intelligence Basics, The Robotic Process Automation Handbook and Learn Python Super Fast. He is also the founder of WebIPO, which was one of the first platforms for public offerings during the 1990s. As of this writing, he did not hold a position in any of the aforementioned securities.

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