Marqeta’s IPO shines a light on fintech fees
Marqeta, a fintech company, raised $1.2 billion with an initial public offering that priced high and exceeded expectations. The company priced its shares at $27, above the expected range of $20 to $24, and giving it a market valuation near $15 billion. Marqeta stock jumped 13%, closing at 30.52 on the stock market today.
This IPO adds to a number of recent fintech listings from companies such as the online lender SoFi and the no-fee brokerage Robinhood.
Founded in 2010 and based in Oakland, California, Marqeta sells payment technology that’s designed to detect potential fraud and ensure that money is properly routed. The company also creates customised branded debit cards and prepaid cards for corporate customers that include the delivery group DoorDash and Swedish fintech Klarna, as well as Square.
A large amount of Marqeta’s revenue comes from interchange fees, which is the transaction fee that merchants pay whenever a customer uses a credit/debit card to make a purchase. Due to the Durbin Amendment in the 2010 Dodd Frank Act, banks that have under $10bn in assets receive higher interchange fees than larger lenders from the transactions.
This has allowed fintech start-ups, such as Marqeta and Chime, which is a personal finance app in the US, to take advantage of this by partnering with small banks and taking a cut of the fees.
An increase in profits
Marqeta’s business has drastically increased during the pandemic as people in lockdown have turned to digital financial services such as Square’s Cash App and ecommerce companies such as DoorDash. The company more than doubled net revenues to $290m last year while narrowing losses to $48m. Business from Square made up 73% of Marqeta’s net revenue in the first quarter, which was an increase from the previous year. Marqeta’s agreements with Square last until 2024, according to the company.
Ian Johnson, SVP, Managing Director, Europe, Marqeta: “As the world becomes increasingly interconnected, more people are relying on digital payments to move through each day. Companies throughout Europe are looking for ways to offer better payment solutions for their customers. Marqeta is proud to be a publicly traded company and looks forward to bringing an even greater focus to scaling our products and delivering modern card issuing that launches cards quickly and provides greater flexibility than traditional card programmes. We’re pleased to support European businesses with ambition and purpose who use our platform to help write the future of payments.”
Upgrade launch new credit card with bitcoin rewards
Upgrade, a fintech company focused on providing credit for mainstream consumers, has launched the Upgrade Bitcoin Rewards Card a new version of its Upgrade Card featuring bitcoin rewards. Under the new programme, users earn unlimited 1.5% bitcoin rewards on every purchase as they make payments.
The custody and trading platform for holding and selling bitcoin is provided by NYDIG and the card is a Visa Signature card, which includes benefits such as trip and baggage insurance, purchase protection, and extended warranty coverage.
The company offers credit lines from $500 to $25,000 with the Upgrade Bitcoin Rewards Card depending on your credit score. It works with Apple Pay and Google Pay. Like other Upgrade credit cards, there are no monthly fees, late fees, or returned payment fees.
"Upgrade Card is already delivering over $3 billion in annualised credit to consumers," said Renaud Laplanche, co-founder and CEO at Upgrade. "Starting today, anyone can apply for an Upgrade Bitcoin Rewards Card and enjoy the same affordable and responsible credit as with any Upgrade Card, plus the potential upside and fun of owning bitcoin."
Participating in the crypto economy
Upgrade isn’t the first company to announce a credit card with bitcoin rewards, but it’s the first one that is generally available. Anyone can apply with no waitlist, and start using their virtual card immediately until they get their physical card in the mail.
"Crypto rewards introduce cardholders to a new asset class that is increasingly part of a consumer's financial portfolio," said Terry Angelos, SVP and Global Head of Fintech at Visa. "Whether you're a crypto enthusiast or just getting started, programmes like the Upgrade Bitcoin Rewards Card offer an engaging and low-risk way to participate in the crypto economy."
At the moment, you can’t do much with your bitcoins. You can choose to hold them or sell them. There’s no way to transfer your bitcoins to another wallet for instance. If you choose to sell your rewards, there’s a 1.5% transaction fee.
This card is not currently available in all 50 states. Customers in Hawaii, Indiana, Iowa, Louisiana, Nebraska, Nevada, New Hampshire, North Carolina, Washington, West Virginia, Wisconsin, and the District of Columbia can’t order an Upgrade Bitcoin Rewards Card at the moment.