The new wave of digital transactions that gained momentum as the pandemic brought the world to a standstill, is cementing – and it requires upgraded payment solutions that use cash substitutes disruptive to traditional banking systems. This means leveraging new technology for debit cards, credit cards, prepaid cards, tokenized cards, electronic funds transfers, BNPL options, internet banking, and e-commerce payment systems.
Marqeta, a cloud-based open API platform, is one company that is well-positioned to provide modern card-issuing solutions and transaction processing that are more developer-focused, customizable, and secure.
Marqeta enables businesses to offer payment card products to customers without them having to tackle the complexity of liaising with a traditional bank – the back-end payment technology is handled by Marqeta while collaborating with banks that process the payment transactions.
Marqeta chose to go public and priced its IPO on June 8, 2021 – its shares began trading on the Nasdaq Global Select Market on June 9.
A couple of years before going public, Marqeta hired Vidya Peters as its chief marketing officer in 2019. She helped foster the firm’s goal of becoming a publicly listed company last year, soon after which she took charge as its chief operating officer.
When asked how she made it big and how it feels to be at the top of her game in an industry that has traditionally been male-dominated, Vidya said she credits her success to the women who entered the field before her and paved the way for women in current financial leadership roles by asking important questions like: Why are there no women in the boardroom? Why are there no women on the executive team? Where's the diversity?
Vidya is unsure if she has made it big yet – that is because, for her, every day is a struggle. Having South Asian roots, Vidya shared how women are conditioned to conform to certain boundaries – hence, when she hears something similar in the work context, it doesn't faze her, and she takes challenges head-on. To perform her best, one thing she always carries to work is a learning mindset. She is unafraid to ask what may be perceived as illogical questions, and is always the first one to ask about a topic she hasn’t got the faintest idea about. This has instilled resilience and courage in her to take on challenging professional roles.
I spoke with Vidya about how e-commerce has changed customer spending habits and purchase patterns as a consequence of Covid-19, and what's next in the evolution of the payments landscape.
Consumer spending habits have evolved significantly during the pandemic, yet the tech behind credit cards largely hasn't kept pace – why?
Vidya Peters: I think of that as the next new frontier for innovation. If you think about the credit cards that we’ve had in our wallets, they've done very simple things for a very long time. For example, ten years ago, they checked your credit limit and approved the transaction. Later on, credit cards also started checking for ZIP codes, and that was about it. Sometime later, credit cards started to offer rewards, in the form of airline points, hotel points, and cashback, and that had been the extent of the innovation. The level of personalization based on someone's persona, their spending habits, and their demographic hasn't come out yet – and I think until you get to that level of relevance for someone, you'll never create the true form of loyalty. The reason why every credit card is so dispensable today is that they're all playing with the same three or five behavioral benefits. Hence, I think there's a whole new form of untapped innovation there, but particularly now, with rising interest rates, people are going to be very conscious about their spending tools. Companies that can innovate and truly create great customer experiences will stand out because currently, people are not thinking about all of these payment methods interchangeably as they would have at the height of the booming economy.
How is the string of Marqeta's partnerships adding value to the payments ecosystem that the company is trying to build?
Vidya Peters: Talking about the recent partnership with Klarna, they are one of our hypergrowth customers – and we've been very excited to power them with multiple products in multiple geographies. We also have Afterpay, Square, and Coinbase – a variety of different innovative verticals. Additionally, we also work with incumbent FIs like JPMorgan Chase, and Marcus by Goldman Sachs – large banks that want to create innovative offerings. Technology giants like Uber and Google have also partnered with Marqeta for some of their payments products. In a nutshell, the basis for partnerships is anyone who wants to create an innovative experience for their customers. When we think about partnerships more broadly, we think about the customer, and what is the innovative experience that they are looking for – diversity of partnerships that meet our customer needs is very important when we're looking to build that ecosystem. At times, our platform doesn't fully address some of the customer needs – that's when we work with a partner like Deserve or the First National Bank of Omaha by bringing both of our offerings together to offer something more holistic to our customers. The First National Bank of Omaha helps us reach an addressed scale with decades of strong experience that may matter for some customers, and Deserve brings a very disruptive and innovative approach to credit.
What are the current strategies/techniques that Marqeta is employing to cater to the needs of SMBs and the underbanked?
Vidya Peters: One of the beautiful parts is that we are an infrastructure platform, so anyone can come and build on us – and one of the things we have been inspired by is the breadth of offerings that have come out in the form of digital banking offerings to serve the unbanked or underbanked. Cash App has become a default banking offering for the underbanked and the unbanked population. I also love the example of Greenlight, which is a customer that we serve through the First National Bank of Omaha – they provide an offering for children and teenagers, through which parents can earn rewards by helping children invest their money. Those are the customers that have never been banked before. When you create this infrastructure and make it accessible to companies for them to build, you're watching a whole breadth of products come out to the market to serve people that have never been served before and change their lives. Branch is another platform we partner with that builds a card on our platform allowing early wage access to its employees.
What are the prevailing challenges in the payments landscape, and what’s the future of next-generation payments?
Vidya Peters: We saw the rise of crypto in the last couple of years, new payment methods such as BNPL and new flavors of it, and many new digital banking offerings have come up. I don't think that there is a single portion of the financial services industry that is not getting disrupted. I think this is a very exciting time, because right around the corner, we're going to see another company come out solving an age-old problem in a whole new way. Consumers benefit from all these innovations, from the lowering of the price of certain products, whether it's financing products or the availability of products that give them access to cash faster.
However, rising inflation has made it even more critical for consumers to get access to their cash flow faster. Because of stretched budgets, people are trying to push the limits of how quickly they can get their paycheck and have the flexibility to make payments. BNPL, for example, which used to be leveraged for a special purchase, is now being used in grocery stores and gas stations because of the pressure on cash flow. These are some of the challenges we're seeing consumers face, but the good news is that now there are more offerings available to them in the market to meet those rising pressures. But I hope there will be an end to rising interest rates, because it's clearly sending our economy and consumer needs into a tailspin.
Some recent significant partnerships are intensifying competition in the BNPL space – how does Marqeta keep up with that?
Vidya Peters: We love that more players are understanding and seeing the value of BNPL. We serve almost every major BNPL provider in the market, including Affirm, Afterpay, and Klarna in multiple markets here, in North America, Australia, New Zealand, and also in Europe, which assures us that BNPL is not some experimental paying method, and it's here to stay. For the same reason, many other technology giants are entering the space, because they realize that consumers are demanding it or using it. We're very proud to power most of the market leaders in the space, who are leveraging Marqeta’s platform.
On our end, we will continue to build strong offerings. Recently, we announced a significant expansion of our credit platform with a set of 40 new credit API dashboard access for businesses – to be able to build ultra-innovative and tailored card products on our platform. We are also the only modern card issuing platform that powers not just prepaid and debit but also credit solutions.