Marqeta Signs Five-Year Deal with Varo Bank to Become Exclusive Issuer Processor in the US

Rhea-AI Summary

Marqeta (NASDAQ: MQ) has signed a five-year deal with Varo Bank to become its exclusive issuer processor in the US. Varo Bank, the first nationally-chartered consumer techbank in the US, selected Marqeta for its sophisticated card-issuing technology and faster speed-to-market. This partnership will enable Varo to offer digital wallet tokenization with Apple and Google Wallets for its cardholders.

Varo Bank serves over five million cards in-market, offering services such as fee-free checking accounts, free ATM access, cash advances, and high-yield savings accounts. The collaboration aims to enhance Varo's ability to help customers improve their financial health and relationship with money through its mobile app.

Positive

• Secured a five-year exclusive deal with Varo Bank, a nationally-chartered consumer techbank
• Partnership expands Marqeta's reach to over 5 million cards in-market
• Enables digital wallet tokenization with Apple and Google Wallets for Varo's cardholders
• Aligns with consumer trends towards digital-only banking solutions

Negative

• None.

Insights

Financial Analyst

The five-year deal between Marqeta and Varo Bank is a significant development in the fintech sector. This partnership positions Marqeta as the exclusive issuer processor for Varo, potentially boosting Marqeta's revenue and market share. For Varo, this collaboration could enhance its operational efficiency and technological capabilities.

Financially, while specific figures aren't disclosed, such long-term contracts often involve substantial revenue commitments. Marqeta's platform, enabling real-time transaction visibility and digital wallet integration, could drive increased card usage and customer engagement for Varo, potentially leading to higher transaction volumes and fees for Marqeta.

Investors should note that this deal aligns with current market trends, as highlighted in Marqeta's 2024 State of Payments report, showing 51% of US consumers have changed their primary bank, with 18% considering a switch. This trend favors innovative fintech solutions, potentially benefiting both Marqeta and Varo in the long run.

Tech Expert

The partnership between Marqeta and Varo Bank represents a significant technological advancement in the banking sector. Marqeta's modern card issuing platform offers sophisticated virtual, tokenized and physical card-issuing technology, which could greatly enhance Varo's service offerings.

A key technological benefit is the integration of digital wallet tokenization with Apple and Google Wallets for Varo's cardholders. This feature aligns with the growing consumer preference for digital payment solutions and enhances security through tokenization.

Moreover, Marqeta's API-driven platform enables real-time transaction visibility, a important feature for modern banking apps. This aligns with the 20% of US consumers surveyed who are attracted to better mobile app experiences in banking. The partnership could potentially accelerate Varo's product development and innovation cycles, giving it a competitive edge in the rapidly evolving fintech landscape.

Market Research Analyst

This partnership between Marqeta and Varo Bank is strategically aligned with current market trends in digital banking. Varo's status as the first nationally-chartered consumer techbank in the U.S. gives it a unique position in the market, potentially attracting consumers looking for innovative financial solutions.

The deal taps into the growing consumer appetite for digital-only banking solutions. Marqeta's research indicating that 51% of US consumers have changed their primary bank and an additional 18% are considering it suggests a significant market opportunity. This shift towards digital banking could drive customer acquisition for Varo and, by extension, transaction volume for Marqeta.

Furthermore, the focus on financial inclusion and empowerment could resonate well with younger, tech-savvy consumers who are often underserved by traditional banks. This positioning could help both companies capture market share in an increasingly competitive fintech landscape, potentially leading to sustained growth over the five-year contract period.

Varo Bank selected Marqeta as its issuer processor to help achieve its mission of bringing financial inclusion and opportunity for all

OAKLAND, Calif.--(BUSINESS WIRE)-- Marqeta (NASDAQ: MQ), the global modern card issuing platform that enables embedded finance solutions for the world’s innovators, today announced it has signed a five-year deal with Varo Bank, N.A., the first nationally-chartered consumer techbank in the U.S., to become its issuer processor. Varo Bank offers services such as fee-free checking accounts, free ATM access at over 40,000 locations, cash advances and lines of credit, secured credit-building credit cards, instant payment solutions and high yield savings accounts to customers, with over five million cards in-market. Varo selected Marqeta for its ability to combine sophisticated virtual, tokenized and physical card-issuing technology with faster speed-to-market which will help its customers improve their daily relationship with money.

Through its mobile app, Varo’s innovative financial platform empowers customers, improves their financial health and helps them make real progress with their money. With Marqeta’s platform, Varo will also enable digital wallet tokenization with Apple and Google Wallets for its cardholders. Varo is the first bank to receive a de novo national bank charter as a consumer techbank in the U.S.

Marqeta’s 2024 State of Payments report found that consumers are open to switching their primary bank to a digital-only or non-traditional offering that’s a better fit for their lifestyle and habits – with 51% of US consumers surveyed citing they’ve already changed their primary bank—and an additional 18% of consumers currently considering changing. Additionally, 20% of US consumers surveyed were intrigued by a better mobile app experience in searching for a bank.

"We sought an issuer partner that complements our unique position as both a technology company and a regulated financial institution," said Varo Bank CEO Colin Walsh. "This partnership with Marqeta enables us to offer cutting-edge card issuing technology, giving our customers enhanced ability to view and manage their transactions efficiently. This advancement aligns perfectly with our mission of financial empowerment."

“Marqeta is proud to announce this deal with Varo Bank, which relies on the latest payments and banking technologies to help Americans who are striving to get ahead,” said Simon Khalaf, CEO, Marqeta. “Varo's mission is aligned with ours and we can't wait to start innovating with the Varo team, enabling their customers to see transactions in real-time thanks to Marqeta's APIs."

About Marqeta (NASDAQ: MQ)

Marqeta’s modern card issuing platform empowers its customers to create customized and innovative payment cards and embedded finance offerings. Marqeta’s platform, powered by open APIs, gives its customers the ability to build more configurable and flexible payment experiences, accelerating product development and democratizing access to card issuing technology. Its modern architecture provides instant access to highly scalable, cloud-based payment infrastructure that enables customers to launch and manage their own card programs, issue cards and authorize and settle transactions. Marqeta is headquartered in Oakland, California and is certified to operate in more than 40 countries globally. For more information, visit www.marqeta.com, Twitter and LinkedIn.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements expressed or implied in this press release include, but are not limited to, quotations and statements relating to changing consumer preferences; increasing consumer adoption of certain digital payment methods, products, and solutions; which payment, banking, and financial services products and solutions may succeed; technological and market trends; Marqeta’s business and growth; Marqeta’s products and services; and statements made by Marqeta’s senior leadership. Actual results may differ materially from the expectations contained in these statements due to risks and uncertainties, including, but not limited to, the following: any factors creating issues with changes in domestic and international business, market, financial, political and legal conditions; and those risks and uncertainties included in the “Risk Factors” disclosed in Marqeta's Annual Report on Form 10-K, as may be updated from time to time in Marqeta’s periodic filings with the SEC, available at www.sec.gov and Marqeta’s website at http://investors.marqeta.com. The forward-looking statements in this press release are based on information available to Marqeta as of the date hereof. Marqeta disclaims any obligation to update any forward-looking statements, except as required by law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240806420776/en/

Media:

James Robinson

530-913-0844

jrobinson@marqeta.com

Source: Marqeta

FAQ

What is the duration of Marqeta's deal with Varo Bank for issuer processing?

Marqeta (MQ) has signed a five-year deal with Varo Bank to become its exclusive issuer processor in the US.

How many cards does Varo Bank currently have in-market?

Varo Bank has over five million cards in-market.

What new feature will Marqeta enable for Varo Bank's cardholders?

Marqeta's platform will enable digital wallet tokenization with Apple and Google Wallets for Varo Bank's cardholders.

What percentage of US consumers have changed their primary bank according to Marqeta's 2024 State of Payments report?

According to Marqeta's report, 51% of US consumers surveyed have already changed their primary bank.