The payments landscape comes of age
At a time when many in payments world trumpet their stats and status, Marqeta Inc. of Oakland, Calif. bills itself as one of the few tech innovators on the issuer side. Founded six years ago by CEO Jason Gardner, has built a processing platform that helps client companies to issue credit cards, debit cards and prepaid cards – all of which provide funding and make payments digitally through smartphone applications.
The platform, for starters, provides a way to fund and process payments for on-demand delivery outfits such as DoorDash Inc., a San Francisco-based company that arranges meal deliveries to consumers ordering online from restaurants.
Marqeta’s technology also facilitates bank partnerships with FinTech companies such as Affirm Inc., San Francisco. Working with partner bank and lender Cross River Bank, Inc., of Teaneck, NJ, Affirm offers consumers a virtual card to pay merchants at check-out.
Salman Syed, Marqeta’s vice president for business development, provided insights into the company’s technology in an interview with Banking Strategies. He spoke at BAI Beacon in October 2016.
BAI: What does Marqeta’s platform and technology bring to the world of payments?
Salman Syed: At this point we’ve built a platform that gives people the ability to essentially democratize the issuance of credit cards, debit cards and prepaid cards. We have probably the most modern issuer processing technology platform and it enables new companies to disburse funds – whether as debits or credits or prepaid – and process payments. In addition we have also built a layer on top of that to handle all the regulatory components required to launch a program.
BAI: What capabilities does your platform bring to a company like DoorDash?
Syed: A feature of our platform everybody finds very, very valuable is just-in-time funding or JIT. A card is given to each delivery person at Door Dash. Because the card is powered by our technology we actually take that payment message riding over the network rails, unbundle it and send it to DoorDash to give them the ability to see in real time whether the delivery person is spending the right amount of money at that restaurant for the right order – and if so, then approves it. We have the ability to immediately put funds on the card just for the amount that they’re supposed to send. That’s all new functionality that doesn’t really exist elsewhere in the marketplace today.
BAI: What about your processing platform should interest retail bankers?
Syed: We can enable retail bankers to put new products in the marketplace that have much more robust functionality than what traditional payments processors at banks have had in the past. There is a lot of disruption going on in banking today. A lot of these new disrupter companies are looking for issuer processing capabilities with a lot more functionality than what they’ve gotten traditionally. That’s an opportunity for us and for retail bankers to work with us and with innovative companies who operate in this space.
BAI: How does the changing nature of the consumer fit into this picture?
Syed: Millennials have come of age and are much more technology oriented. There’s an immense opportunity here to provide financial services to a whole generation that isn’t necessarily going to the traditional outlets like the retail bank. As a result, we’re talking with a lot of people today in new start-up tech companies who say when they acquire a customer, they don’t necessarily want to send them a piece of plastic. They’d prefer to generate a card in a virtual format directly on the phone. They want to find a way to just move that card directly into Apple Pay – and that’s something we’re working on.
BAI: In what ways can banks get involved?
Syed: Alternative lenders such as SoFi and LendingTree go through the process of acquiring new customers to assure they’re customers worth doing business with. But once that’s happened, I think traditional banks can still provide their own underwriting services for those types of customers. Banks also have a clear opportunity to leverage new technology to provide direct banking services to new customers they’re not reaching effectively now.
BAI: So your platform and technology give banks new avenues to partner with companies entering this space as card issuers. Or banks can underwrite and even fund some or all of that new customer credit outside the current reach of the bank?
Syed: Yes, exactly.
Mr. England is a contributing writer to BAI Banking Strategies and the author of Black Box Casino: How Wall Street’s Risky Shadow Banking Crashed Global Finance.