Here’s a breakdown of 4 key details from Goldman-backed Marqeta’s plans to go public, including its business relationship with Square and new hires at the $4.3 billion fintech

Marqeta earns most of its revenue from interchange

Samantha Lee/Business Insider

Marqeta operates on a usage-based business model, meaning that the more its customers use its card-issuing tech, the more money it earns.

In 2020, its revenue grew 103% year-over-year to $290.3 million. Largely, that growth is a result of the boom in online spending and displacement of cash brought on by the coronavirus pandemic. 

The fintech prospered as a result of customers like DoorDash, Instacart, Affirm, and Klarna all enjoying massive growth in 2020. Across all its users, Marqeta processed $60.1 billion in total volumes, up 177% from 2019. 

The majority of Marqeta’s revenue comes from a cut of interchange, which is the fee card-issuing banks take every time a purchase is made. 

The amount a bank can earn on interchange fees is subject to Dodd-Frank regulation called the Durbin Amendment, which limits debit fees that larger banks can charge. 

However, banks with less than $10 billion in deposits are exempt from those restrictions. Marqeta noted that it currently only partners with exempt banks — including its major partner, Sutton Bank — meaning it can earn the higher rates on swipe fees. 

Marqeta also earns from monthly access and ATM fees, and charges customers for things like fraud monitoring and tokenization. In an effort to branch out beyond its bread-and-butter card-issuing, Marqeta launched its tokenization-as-a-service in September 2020. It’s an API that allows new and existing customers to use its tokenization tech, which replaces sensitive card numbers with one-time tokens, reducing the risk of breaches and fraud.

While revenue has grown, Marqeta is not profitable, as is the case with many tech startups. It reported net losses of $47.7 million in 2020, down 18% from 2019. 

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