Marqeta made its mark as the debit card-issuing partner for Block’s popular Cash App, and the fintech’s next goal is to become a leading credit card provider via embedded finance.
The Oakland, California-based firm on Monday announced the rollout of a new credit card platform that enables brands to directly offer credit cards within their own websites and applications and customize rewards rewards through their own dashboards.
The backbone of the new service is Power Finance, a credit card program management firm Marqeta acquired earlier this year for $275 million. After several months of back-office work, Marqeta recently completed the integration of its existing digital card-issuing capabilities with Power’s infrastructure to support end-to-end consumer and commercial credit card services, said Randy Fernando, Marqeta’s vice president of product.
Marqeta plans to pair brands with bank partners that will provide the BIN sponsorship and capital funding and manage the card receivables, he said.
“Historically, when a non-financial company wanted to launch a co-branded credit card, they had to find a processor and a bank sponsor and someone to manage the program, but we’ve created a one-stop shop where a brand can access every component of what’s required to launch a credit card program on our platform,” Fernando said.
Marqeta last year said the $1.5 billion-asset Evolve Bank & Trust is one of its banking services partners, but Fernando declined to name other banks the fintech has lined up.
“We’re identifying brands and banks that may be best suited to work together through our platform,” Fernando said.
The intersection of banking and fintechs through embedded finance will be a hot growth area for the next few years, said Susan French, a principal with Wise Owl Advisors, speaking at the Bank Fintech Fusion Conference in Scottsdale, Arizona, last week. French previously was the head of product for BBVA Open Platform, and prior to that she was global head of Visa’s developer program.
While certain features of embedded finance and banking-as-a-service can overlap, increasingly embedded finance describes financial services experiences delivered by a third party, French said.
“Embedded finance happens when a brand that’s not a bank provides financial services directly to consumers or employees at their point of delivery, under their brand and within their own user experience,” she said.
Marketers see embedded finance as a way to create stickier relationships with consumers to drive repeat purchases, and to drive retention with employees, French said.
“There are enormous opportunities within embedded finance for brands to deliver new propositions and deeper relationships to customers, while generating new revenue streams from services and fees, deposit incentives and interchange share,” she said.
Bain Capital Ventures estimated that embedded finance will expand from more than $3 trillion in U.S. transaction value today to more than $7 trillion by 2026, with banks and fintechs operating as competitors and collaborators.
“There is definitely plenty of healthy competition within embedded finance, but Marqeta brings a platform that’s scaled some of the most successful card programs in the market in recent years together with innovative credit card program management through Power, creating what we believe is a unique combination,” Fernando said.