Marqeta's new credit card issuing program is the cherry on top of its card issuing services
- Marqeta has announced its credit card issuing debut.
- This move enables it to round out its payment card processing and issuing services.
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Only days after beginning IPO preparations, the API issuer-processor has announced plans to start issuing credit cards after gaining a strong foothold in the debit and prepaid issuing market.
Marqeta plans to make the service customizable and user-friendly for its business clients by introducing a dashboard where they can adjust account parameters, including rewards, APR, and credit lines based on custom rules, which would enable the companies it partners with to instantly activate credit cards upon approval and provision cards directly into mobile wallets. The company is bringing in API-based credit card support platform Deserve to provide program management services including origination, underwriting, customer service, and compliance.
With some large brands under its belt, Marqeta has already established a name for itself in the card issuing space. The company’s nonbank structure has allowed it to bypass some of the high upfront investment costs that businesses usually come across when looking to launch a payment card to market—making Marqeta an attractive partner to work with and enabling it to forge key partnerships with firms including Square, Instacart, and Affirm.
More recently, it began working with Afterpay to help with merchant onboarding and payment processing, and in late 2020 it signed with Uber to streamline customer payment processes across its ride-hailing and food delivery businesses. Further, Marqeta powers DoorDash’s Red Card, an instant-issue physical payment card that couriers use to pay for orders, which are then funneled through Marqeta’s processing system.
These partnerships have allowed Marqeta to extend its reach in the payment processing and card issuance space—with the company closing out 2020 with 270 million issued cards, up from 140 million at the end of 2019—and its new credit card program can allow it to further grow and solidify its standing.
The launch of its credit card issuing service can allow Marqeta to build out its repertoire of payment card services, enabling it to capture a wider range of business.
- Credit cards are still an attractive tool for businesses—and Marqeta can hone in on this interest to extend its customer reach and compete head-on with banks. Though credit cards have been suffering during the coronavirus pandemic as consumers lean more into debit cards, they’ve historically offered credit card issuers a valuable revenue stream while helping brands that partnered with issuers find a useful way to boost customer engagement. Marqeta can help providers find a more cost-effective way to bring a credit card to market—tapping into demand among cash-strapped businesses—while leveraging its user-friendly platform to attract businesses that want a simpler way to manage cards.
- The firm might look to penetrate the retail space to diversify its card portfolio. Beyond its buy now, pay later partnerships, Marqeta doesn’t currently operate within the retail sector. However, because it’s a space that credit cards are popular in, the company could benefit from introducing retail cobrand credit cards, especially since it’s a niche market that other issuers, including Synchrony, have found success in. It’s worth noting that the cobrand retail card market is becoming even more saturated as other issuers, including Citi and Alliance Data, work to expand retail partnerships—but Marqeta can leverage its customizable platform to set itself apart from competitors.
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