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Marqeta, Zip attribute growth to BNPL partnership in ‘one year later’ announcement

Marqeta, a global card issuing platform that enables clients to build configurable payment experiences, announced partnering with Zip (formerly Quadpay), a point-of-sales (PoS) credit and digital payment service provider to offer BNPL services in Australia.

Despite the BNPL service being operational for a year, this is the first time Zip and Marqeta have publicly announced the partnership. Zip has cited 176% growth in transactional in the last quarter, up to $5.8 billion, with Marqeta posting a 350% year-over-year increase in BNPL net revenue for the second quarter of 2020, according to FinExtra.

So why if the partnership has been successful, why has it taken a year to announce? Well, for one, Marqeta has been pretty busy this past year, going public via IPO on the NASDAQ under the ticker symbol MQ at a $15 billion valuation in July. The company priced 45.5 million shares at $27, above its expected range of $20 to $24.

The debut was largely attributed to the increase in transactional volume and revenue since 2020, with the company processing $24 billion in credit transactions in the first quarter of 2021. It sounds like Marqeta would want to share the good news about its partnership ahead of its IPO, but the company still decided to keep it under wraps until now.

One reason could be that Marqeta, launched in 2010, draws almost 70% of its revenue from payment processor Square, extracting that money from net interchange fees set by the card networks and paid by card holders, according to regulator filings.

The decision to wait until IPO could have been strategic, given the large amount of money they pull from Square, which was also working to secure a blockbuster $29 billion acquisition of Australian BNPL and Zip rival Afterpay. CEO of Marqeta Jason Gardner said Square’s acquisition of Afterpay doesn’t threaten Marqeta’s long-term business.

The card-issuing platform has been making inroads with every other BNPL in the space, it seems, with Gardner telling Yahoo it has also started working with Affirm to power BNPL on Amazon.

These new announcements remove some of the fog around Gardner’s statements around Marqeta’s long-term plans for customer diversification, revealing the company has been working on the ‘down-low’ to build additional revenue streams moving forward. The CEO revealed that revenue generated from companies outside its top-five customers jumped 265% in the second quarter of 2021.

Background

Marqeta’s card issuing platform is built with APIs that allows clients to integrate premium card services into both physical and virtual cards. The platform enables Zip customers to attach lines of credit to their accounts, meaning customers can repay multiple transactions through a single installment plan rather than multiple.

Founded in 2013, Zip is a Sydney-based global payments company which serves over 45,000 merchants, 7.6 million customers worldwide, and is listed on the Australian Stock Exchange under Z1P.

Formerly Quadpay, the company offers PoS credit and digital payment BNPL services to retail, home, health, automotive and travel industries. Zip also provides a Shop Anywhere virtual card that offers spending at all Visa-authorized merchants.

Zip is the second-largest Australian BNPL, behind Afterpay, and has been making its own significant acquisitions recently. The company recently purchased Czech Republic-based Twisto and United Arab Emirates-based Spotii, showcasing a plan for the company to expand its services to the EU, Middle East and North Africa markets, according to Reuters.

“Zip is a customer-focused company, and customers told us loud and clear they wanted to be able to use their interest-free Zip BNPL account anywhere,” Zip managing director of Asia and Global Payments Hamish Moline stated in the release.

“Marqeta was a key part of this major initiative, which has helped us significantly grow our customer base and capitalise on the in-store opportunity.”

It looks like for now, Marqeta is focused on building up BNPL partnerships, utilizing the same companies that compete directly with Square’s Afterpay. It makes sense, when you look at all these pieces, as to why the company would think twice before releasing this news until after they had built up substantial revenue bases, and both Marqeta and Square had their big business filed away.

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