A lot is going on the issuing side. New players are entering, competition is crossing borders, and existing players are expanding into new products. Marqeta is making perhaps the biggest expansion of its platform since its launch.
I’m joined by Chief Product Officer Kevin Doerr to talk about the firm’s new credit card issuing platform. We talk about what that means for the firm, its customers, and its competition. Doerr joined the firm last year and it’s been a wild one — he shares his experiences that show a company in growth mode coping with the changes of organic expansion, as well as challenges of dealing with the pandemic.
We’re announcing today that Marqeta is moving into the credit space, similar to how we’ve executed and grown from our origins as an issuer processor on the prepaid and debit side of the business with our customers. We have seen a ton of demand from our existing customers, and also potential customers, for us to take some of the attributes, characteristics and actions that we’ve taken with modern API’s and good program management into the credit space.
We’ve been working on product and a set of features and with some partnerships in the industry, we are able to accelerate our launch into the credit space and move into this adjacent market. It’s a very natural adjacency, for us and for our customers. We’re excited to take this out to our customer base.
The business case
From a business point of view, the business case that’s supported, our investments, demand from existing customers, opportunity with newer and even larger customers, gives us a clear perspective. It takes a long time to get these programs together and get to market. You may not have all the granular controls you want over configuration settings. You may not have the acceleration of changes you want to make to programs in the marketplace.
I think when customers look at the opportunity that we created in prepaid and debit, and that flexible, granular control, and the ability to execute on a plan or a new insight from their own data very, very quickly, they wanted to see us offer that in the credit space. And so the business case for us became very clear to align with that, to build with a similar level of scale, availability and quality that we have in our other areas. And then take that to market.
Credit brings different challenges
I think one of the challenges from a business model point of view is it’s a completely different business. And so we’re choosing to enter the marketplace with other partners. We are doing what we do best with respect to credit. But we’re going to work with some other partners to help on the program management and ledger initially. So we’re excited about that because it gets us into market faster for our customers to be able to deploy.
And on the technical side, the good news is there is a lot of what we have built in the way we’ve built it to support the debit and prepaid programs around the globe. There’s a way of thinking — very similar DNA — to how we construct the platform and infrastructure pieces, and then the application stack. What is different here is some of the complexity around the rewards programs that we’re putting in place. Obviously, there is complexity around managing APR, around managing calculations on fees and interest and things like that. There are a number of technical challenges that are different from some of the other operations that we run. And we’ve just looked at those very, very carefully, learned as much as we can and then iterated over time to get to where we are ready for launch today.
It’s been fantastic. It starts with onboarding almost completely remotely. I had a great chance to meet the executive team, board, investors and a few of my leadership team. But the vast majority of my large team, I’ve not met in person — it’s only been over Zoom or Meet or other products. That’s been interesting: how to land yourself into an organization, build the trust, build the credibility, build the relationships that are necessary to be able to then put plans in place and be able to execute.
I think the other part that we’re probably both not dancing around at all has been the pandemic and the extraordinary impact that it’s had on companies like Marqeta. Obviously, the pandemic itself, and its sort of grim reality, has been extremely challenging for the entire United States and for the world at large. But the impact on payments, infrastructure, digital payments, and the behavioral changes we’ve seen have been extraordinary.
We’ve seen massive, massive growth and uptake of products and services that our customers offer — whether it’s on demand delivery or p2p payments, as well as contactless payments, which has become a critical and accepted adopted part of our usual routine, in terms of transactions. All those things have served to to grow our business dramatically over the past year.
We definitely had a couple of categories — travel and expense management were areas corporations pulled back from. Some of our customers certainly saw some unfavorable trends. Those have started to change already for some of those customers. And, you know, travel never really went away. But it has taken a pretty big hit to those customers. We stuck with them. And we’ve tried to provide the support that we can through the last year or so.
Launching with partners
Our first partner that we’re launching this with is Deserve. We’re not exclusive — neither company’s exclusive in this arrangement — but we’re super excited about their technical capabilities, their perspective on the marketplace, the way they think about customers, customer support and service. We’re very aligned, there’s really good DNA match between the two companies. And so in our MVP, we really understood that they were the right partner to be able to take some of the infrastructure and operational approach, specifically around underwriting and program management, that would allow both of us to serve customers much more quickly in the space.
We do expect that there could be other partners in the future that we work with, both on the program management side, but potentially on the bank side. And look, it’s most important for us to be able to provide customers what they need as quickly and as robustly as possible. We think about other parts of that stack and other parts of the operational side as sort of a later question for us.
New use cases
We’re gonna see a lot more interesting use cases come out of the capabilities that we’re providing to customers. I go back to our core, which is that we’re a developer company. We’re built for developers. And so when you enable a set of given transactions, we want some level of robustness and completeness. What we’re doing is we’re giving a set of functionality to another set of developers at other companies to think about their use cases. And to think about them extremely creatively over their value proposition, the differentiation that they can build on top of these API’s.
That enablement is really the thing that we’ve been successful with in terms of prepaid and debit. And now we’re bringing that same kind of playbook to the credit marketplace. On top of that, you are starting to see some interesting use cases from customers that are in the market with other products today: a company like Fold, which is using a debit card today with the notion of a rewards program that’s actually tied to satoshis. You can spin the wheel at a transaction, and it’s a bit of a gamification of it. But the card is proving to be wildly popular. And it’s a great way to deliver a rewards program to a slightly different audience.
I love the thinking behind that. And I think there’s many, many other companies and customers and potential customers that can deliver really innovative use cases. We’re here to support them, whether they are in the financial form, the rewards form, or in other areas around performance. What kind of functionality can you build into the application to make it easier for customers to want to do business with you and be top of wallet?
Go to market
We’re going to work closely with Deserve. We’re going into beta right now, actually. And our intent is to work with a couple of customers, to get into motion with it, understand what we need to understand and make sure that we have all the operationalization to our products, API’s and support that we need to and then start to open up to other programs later this year.
We anticipate having several programs on board by the end of the year for sure. But we want to get started with a few beta customers and make sure that everything that we’ve been building, as we start to operationalize, is going to meet their needs. It’s often the case that when we get into market, we find that there are a couple of more transactions that customers will want or need to flesh out their use case for experience. And we want to be able to use those as fast follows on our roadmap to provide solutions for customers.
Bringing in new skills
One of the things I found is that you always want great developers and great product managers. Period. But it does pay to have specific expertise in banking infrastructure, whether that’s prepaid debit, credit, or any of the above. You need to have an understanding of the fundamentals. What does the fundamental banking infrastructure look like? What are the protocols that are used? What’s the understanding of the messages that are typically moved back and forth? How do you manage the data files? How do you continue to take the combination of all four of those things and create systems and architecture that produces the least amount of latency, highest amount of performance, and also the the highest degree of surety or certainty that the money you’re moving around is as accurate as possible?
Having people from the community — and I like to think about the modern fintech community — has been very helpful. And we continue to recruit those talented folks on board, whether it’s in design, engineering or product.