Visa Inc (NYSE:V) lead a $25M round of Series D funding for credit card processing startup, Marqeta. Along the investment, Visa also announced it's entering into a strategic partnership with Marqeta, looking to grow "virtual, physical and tokenized payments [through a] developer-friendly platform." This is the latest in a string of recent investments Visa has made into the electronic payments space — an initiative emphasized in its recent earnings report.
What likely drew Visa to Marqeta its Just-In-Time (JIT) Funding feature — something that's garnered the company a lot of attention in the FinTech space. JIT Funding allows companies to authorize their own card transactions, in real time. This allows a company to, for example, issue its own prepaid debit card for a special project. Employees may use the cards to make any necessary purchases, with the issuer resolving payments on a case-by-case basis, thus minimizing risk. A business owner using Marqeta can dynamically restrict card authorizations by merchant cateogry, or even down to a specific merchant.
Beyond JIT, Marqeta provides business owners with five solutions: Delivery, Lend, Expense, Disburse (Payout and Incent), and Virtual. Expense and Disburse Payout are what powers JIT. Virtual has been another solution that's drawn considerable attention. Used by companies like Affirm, Virtual allows companies to produce card numbers on demand that may be used immediately to complete a purchase.
The two companies clearly see opportunities to leverage each other's platforms. In an interview with Tech Crunch, Jason Gardner, Marqeta's CEO, said they're "building things [...] that Visa can use and Visa is building things [Marqeta] can use."
According to statements released by Visa, the company is continually on a lookout for new technologies, like Marqeta, and "especially those that have the potential to advance digital payments for Visa’s clients." Recently, Visa also invested in other payment companies, including Stripe, Square, Chain, and Klarna.
Visa's increasing cooperation with new payment platforms has been highlighted by analysts as a chief reason behind its good financial performance. The stock price is up 30% since January 2016.
In recent months, the biggest news has been Visa's partnership with PayPal. Just last year, Visa's former CEO Charlie Scharf would openly speak out against PayPal for its business practices. Under the leadership of Al Kelly, Visa's new CEO, the company has launched into several business ventures with PayPal. Braintree, one of PayPal's credit card processing companies, can now process payments through Visa Checkout. PayPal is also now able to issue its own debit card with the Visa network in Europe.
The new shakeups at Visa come on the heels of news that UnionPay is quickly eating up market share in the global cards market. New research from RBR shows the number of payment cards globally increased by 8% in 2016, with most of the growth coming from the Asia Pacific market, where UnionPay dominates. According to RBR, "continued rapid expansion of the Chinese cards market has helped UnionPay to increase its share of cards to 43% in 2016."