The total addressable global market for card payments is $45 trillion and is expected to grow to $80 trillion by 2030 driven by emerging online FinTech players, including digital banks and other online and mobile services. Recently listed Marqeta (Nasdaq: MQ) is a leading card-issuing platform to these customers.

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Marqeta’s Offerings

Founded in 2010 by Jason Gardner, Oakland-based Marqeta was set up with a mission to become the global standard for modern card issuing. As technology products and services have advanced, so has the need for open, configurable, and well-documented APIs that can embed advanced payment technologies natively into new platforms. Developers and entrepreneurs expect payment technologies to programmatically authorize and direct payment flows without needing to integrate directly with Issuing Banks and Card Networks. To meet these needs, Marqeta sells payment technology that aims at detecting potential fraud and ensuring that money is properly routed. It issues customized physical cards that are similar to credit and debit cards and can be used by DoorDash or Instacart contractors to make point-of-sale purchases from restaurants or supermarkets.

Marqeta’s technology allows customers to create customized and innovative payment cards through its modern card issuing and transaction processing platform. Powered by open APIs, its platform provides customers with the ability to create configurable and flexible payment experiences, speeding product development and democratizing access to card-issuing technology. Its modern architecture gives instant access to a highly scalable, cloud-based payment infrastructure that allows customers to launch and manage card programs, issue cards, and authorize and settle transactions.

Recently, it announced a partnership with Square that launched the Square Card in Canada, helping small business owners with managing their finances and cash flow. With Marqeta’s card issuing platform, Square had the ability to scale its existing U.S. card program and expand it into the Canadian market. Square used Marqeta’s integrations with card networks, compliance enterprise, and risk management capabilities. Marqeta’s Just-In-Time (JIT) Funding allowed Square to control the authorization of transactions based on the attributes and parameters.

Marqeta also announced a new partnership with Bill.com that will create new innovative commercial card products. By using Marqeta’s platform, Bill.com will expand its card payment capabilities, assisting its goals to digitize payments and streamline accounts payable workflows for financial institution customers.

Marqeta’s Financials

Marqeta has employed a usage-based model and derives a large portion of its revenues from Interchange Fees that are generated from card transactions through its platform. It also generates revenue from other processing services such as monthly platform access, ATM fees, fraud monitoring, and tokenization services.

Its revenue in 2020 grew 103% to $290.3 million from $143.3 million in 2019. Net loss fell to $47.7 compared to a loss of $58.2 million in 2019. For the three months ended in March 2021, its revenues grew 123% to $108 million and net losses fell to $12.8 million from $14.5 million a year ago.

Among other metrics, the Marqeta Platform processed $60.1 billion of total processing volume (TPV), up 177%. For the three months ended March, it processed $24 billion of or TPV, up 167%. Marqeta has issued over 320 million cards as of March 2021, across multiple industries.

For the recently ended third quarter, it announced revenues of $131.5 million, growing 56%, and a loss per share of $0.08. For the fourth quarter, Marqeta forecast revenues between $134-$139 million.

Marqeta went public in June this year. Prior to going public, it had raised $530.1 million in 14 rounds of funding from investors including Global Secure Invest, Manhattan West Asset Management, Mastercard, ICONIQ Capital, Coatue, Vitruvian Partners, 83North, Goldman Sachs, and Granite Ventures. The most recent round was held in April 2020 for $2.1 million. It listed at $27 a piece and raised $1.2 billion at a valuation of $15 billion. It is currently trading at $23.95 with a market capitalization of $12.9 billion.

It is not going to be an easy ride for Marqeta. It faces tough competition from companies like PayPal, which offers similar services and has a much wider network. Other payment processing companies like Stripe, Wex, Fiserv also offer tough competition. But its bigger area of concern is its high dependence on Square. Last year, Square accounted for nearly 70% of its annual revenues. Marqeta would need to diversify its customer portfolio to reduce dependence on Square.