Partnerships / Acquisitions

Visa And Marqeta To Transform Global Card Issuance

If the payments landscape is marked by entrenched players partnering with smaller firms making their mark in digital payments, add one more deal to the list.

Visa announced news today of a global partnership with Marqeta, the open API issuer/processor platform that they’ve been working with over the past two years, that will now expand the universe of use cases for the instant issuance of physical, virtual and tokenized payments.

In addition, Visa is making an undisclosed strategic investment in the firm.

In an interview with Karen Webster before the announcement, Jason Gardner, CEO and founder of Marqeta, explained that the firm is only one of a dozen issuer processors globally that, as a core processor, has a native integration with Visa, meaning that Marqeta has Visa’s hardware inside its data centers.

But that, Gardner said, is where the similarities end.

Marqeta’s open API tech and patent-pending “Just in Time Funding” feature make it possible for firms across a variety of verticals that want more control over issuing and authorization to be up and running with a physical, virtual or tokenized account program in a few months and, in some cases, just a few days. A process that with older tech could take years, Marqeta’s platform gives developers access to this tech via their Sandbox in a matter of minutes.

“Developers can literally come in, sign up and start building a card product,” said Gardner. The typical way of building a card product, by going to a bank and leveraging that bank’s platform, need no longer be the norm.

The end goal is to help developers build what Gardner billed a “beautiful, UI direct customer experience” as they seek to put a digital-first experience in front of their customers. Amid the digital embrace, there have been a lot of new entrants into the FinTech user system across the last several years, said Gardner, disrupting issuers and entrenched players. Those modern companies, he said, want to build on top of modern platforms.

As the only core issuer processing system that is delivered through an open API, Gardner says that Marqeta clearly checks that box, by doing, he says, for issuer processing what AWS (Amazon Web Services) has done for cloud computing services.

Gardner said that Marqeta’s “Just in Time Technology” infrastructure removes all the complexity between issuer and processor, as messaging is done in real time. When cards are swiped or phones are tapped at a terminal, the ISO message is packaged and delivered to the customer, who parses the message and tells Marqeta whether approval or rejection is warranted, in real time.

“Think of Marqeta as ‘Intel Inside,’” Garner said, “since we have an incredible amount of control in how that card is being authorized.” A capability that Gardner emphasized is especially important in the B2B space, where trillions of dollars of orders work their way across enterprises daily. That “fine-grained” control made possible by Marqeta is useful not just from a fraud and analytics perspective, but also from an authorization and issuance perspective, where trillions of dollars are spent in B2B commerce daily.

The value for the issuer, Gardner says, lies in that control — where they are then are on the front lines of authorizing the right transaction at the right time and for the right amount — essentially being both issuer and processor without having to build out and operate the infrastructure typically needed to play that role, said Gardner.

Where once the issuer processor was the system of record, Marqeta seeks to give that power — tied to authorization and tied to being that system of record status — to its customers.  That, Gardner said, opens up a wealth of B2B opportunities and use cases and expands the options for enabling, say, alternative forms of credit at the physical or virtual point of sale — instead of having to wait for a card to arrive in the mail to take advantage of such an offer.

But Gardner emphasized that Marqeta’s capabilities support use cases that go well beyond the typical retail POS use cases — everything from expense management to disbursements for on-demand platforms. In fact, Gardner said, those capabilities are the largest part of the Marqeta business offering and, looking forward, will drive a large part of its growth, especially in the expense management vertical where he said more announcements will be forthcoming.

Also on the agenda, Gardner emphasized, is expanding globally — Marqeta and Visa can enable new digital account capabilities in markets where digital rather than tangible plastic is taking root in places as diverse as India and Africa. For Visa, the theme is one of embracing the next generation of digital payments products that are not necessarily card products.

With a nod to those international markets, “digital payments, globally, are growing incredibly fast,” across credit, debit and prepaid, said Gardner. There is also 5 percent growth in the United States, a tidy pace given the sheer volume of payments that comes from the country.

Gardner said that Marqeta has been “heads down and quiet” about what they’ve been doing over the last several years, focused on getting the infrastructure in place to scale the business and transform the way in which accounts are issued in a digital world — and expanding the universe of who can issue them.

“Now we are ready to talk about it,” he told Webster. “The idea of processing and authorizing your own transactions is really significant.”

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