Marqeta Inc. is expanding into banking products as the company looks to cash in on the wave of businesses that want to add financial-services offerings to their applications.
These days, companies far outside the banking sector have an interest in providing financial services. Walgreens Boots Alliance Inc.
offers digital bank accounts, T-Mobile US Inc.
offers a high-yield online checking account and Apple Inc.
recently said it would introduce a high-yield Goldman Sachs
savings account for holders of its co-branded card.
Enabling companies to offer embedded financial services represents an opportunity for Marqeta
which is best known for its debit-card-issuing technology.
“A lot of industries are thinking about how to put all these money-movement products and financial-services products into their experience and into their flow,” Marqeta’s chief product officer, Simon Khalaf, told MarketWatch. “While we’re not inventing this trend, we’re extending to cater to that trend.”
The company is introducing demand-deposit accounts, which provide a traditional bank-account experience that’s tied to a debit card, along with the capacity for direct deposits and early access to pay. The company will also provide support for cash-loading and fee-free ATMs, bill payments and instant funding. It will further allow for automated clearing house (ACH) payments through a Plaid integration.
Khalaf sees the new products appealing to a variety of customer types, including gig- and shift-economy companies that want to offer employees features like instant payments, as well as marketplaces that want to include banking services, “especially when the buyer is also a seller.”
Marqeta shares closed down 4.8% Monday, as the announcement appeared not to be what investors were anticipating.
Mizuho analyst Dan Dolev noted that Marqeta announced the news in conjunction with an appearance by founder Jason Gardner at the Money20/20 conference in Las Vegas. Investors had been excited to see that Gardner would be speaking with a Block Inc.
executive, since a renegotiation of the deal between the two companies is “the number one catalyst” for Marqeta’s stock, he added.
Since the announcement did not in fact relate to a deal renegotiation, the banking news was “kind of uneventful,” Dolev said. There had been”huge anticipation out in the market,” since Block accounts for about 70% of Marqeta’s revenue.
The stock has lost more than 70% over the past 12 months, while the S&P 500
has declined 16%.
Khalaf said that Marqeta’s offering, which leverages application-programming interfaces, addresses challenges that companies would face if they added various services through other means and allows companies to avoid the technological hurdles of integrating multiple players. The companies also would not have to seek out regulated bank partners; although Marqeta isn’t a bank, it works with established banks.
Additionally, Khalaf said, it can allow companies to avoid dealing with questions of how money moves or how funding occurs. “Those are complicated for someone who does not have [a] financial-services background,” he said.
Khalaf said the product launches reflect how financial services have evolved.
Nowadays, people’s connections to banking services start with a payment mechanism, he said. “That’s a reversal from what used to happen, when you would open a bank account and beg the bank to give you a payment card.”
In that sense, he said, the card-issuing company’s move into banking products represents “a very natural expansion of what Marqeta is doing.”