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Marqeta (MQ) Joins Figure to Aid Buy Now, Pay Later Service

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Marqeta Inc. (MQ - Free Report) forged an alliance with the fintech company Figure. With this deal, the company will enable the launch of the Figure Pay product, an all-in-one digital money app.

Figure is a blockchain lending company, which targets the unbanked lot and describes itself as an alternative banking solution provider. Marqeta is a modern card issuing platform, which empowers its customers to create customized and innovative payment cards.

For Buy Now, Pay Later lenders, merchant onboarding and scaling pose significant challenges. It is time consuming to cultivate technology relationships and complete integrations. Lenders are looking for faster and easier ways to onboard new merchants and provide their customers a better user experience. And this is where Marqeta, the global modern card-issuing platform, bridges the gap. Its lending solutions based on modern virtual cards work seamlessly with customers’ mobile wallets and merchants’ POS systems to fund purchases in real time.

The Figure Pay product is an amalgam of services such as  providing users a fee-free deposit account, seamless money transfer to friends and family, an extensive rewards program and free access to a network of 55,000 ATMs. Most attractive feature of the app is is the Buy Now, Pay Later functionality, which allows a consumer to finance his purchases and pay for the same in tranches. The service is currently available in 26 states and will spread nationwide over time.

BNPL services have been a huge hit among buyers so far, especially after the outbreak of COVID-19, which triggered financial distress. Moreover, users prefer BNPL over credit cards as they look to avoid the high costs involved. Others who do not qualify for credit cards prefer BNPL.

The company’s chief revenue officer Darren Mowry said, “Our new survey shows that credit cards are providing consumers with the financial support they have needed throughout the pandemic, with American consumers far more engaged with credit card rewards programs than the UK or Australia. However, we are also seeing a shift in consumer behavior and growth in Buy Now, Pay Later use and alternative credit solutions that provide consumers with flexibility and lower interest rates.”

Management informed that the company’s BNPL net revenues grew 350% year over year in the second quarter of 2021.

Marqeta also extended its year-old partnership with Zip Co. in Australia, which provides BNPL services. Zip mentioned that its transaction volume has grown significantly in the past 12 months since partnering with Marqeta, which is a key component of BNPL. It helped the company significantly grow its customer base and capitalise on the in-store opportunity.

The card issuer debuted trading on Nasdaq in June this year following an IPO. It offers card-issuing technology tools to help companies build and manage their own payment programs. Some of its biggest clients are Square Inc. (SQ - Free Report) , DoorDash, Inc. (DASH - Free Report) and Affirm Holdings, Inc. (AFRM - Free Report) . It competes with other card issuers, such as Global Payments Inc. (GPN), Fiserv Inc. (FISV) and Adyen.

Marqeta’s biggest revenue driver is interchange fees, which merchant banks pay card-issuing banks when a customer makes a transaction with a credit or debit card. The company has a big market at its disposal. Per The Nilson Report, $6.7 trillion of transaction volume conducted through U.S. issuers in 2020, and the company processed nearly $60 billion of the same, which makes up less than 1%. This shows that the company has a huge scope for further penetrating the market.

The stock is worth retaining for the long term as rapid digitalisation of payments will be a catalyst for its growth. Since it started trading in June, the stock has declined 14.9%, almost in line with the industry’s decrease of 14.8%.

 

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The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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