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Marqeta, MoneyLion and Verituity: Adapting to the fintech downturn | PaymentsSource


Marqeta building
Marqeta has diversified its revenue sources beyond Block, its largest client

David Paul Morris/Bloomberg

Two years into the slump for payment technology firms, investors are still picky, pressuring companies to demonstrate a mix of reliable fiscal performance, diverse products and a knack for landing high-profile partners. 

Venture-capital investments in financial technology companies, which includes payment fintechs, fell 42% in 2023, from about $62 billion to $35 billion, according to S&P Global Markets. In 2022, funding fell 32%, from $91 billion, in 2021. While S&P reports there are signs that the pace of the decline is easing, analysts said the payments technology industry still has too many sellers and not enough buyers. 

“I do not sense that the market has turned a corner,” said Aaron McPherson, principal at AFM Consulting. “The fintech space continues to be crowded, which makes it difficult to grow.”

As a result, more consolidation is likely, McPherson said. “I continue to see layoffs in the sector, which suggests that earnings continue to be under pressure,” McPherson said. 

A sample of firms including Marqeta, MoneyLion and Verituity discussed how they’ve changed their businesses to stay relevant in a tough market. 

“There’s not as much money going into fintech,” said Todd Pollak, chief revenue officer at Marqeta. 

Block party

Marqueta’s success has traditionally been tied to Block, which has long supplied most of its revenue. Market pressures are leading Marqeta, an Oakland, California-based company that was founded in 2010, to look for more partners and clients.

“Even a year and a half ago, the No.1 topic was that our Block partnership was 70% of revenue,” Pollak said, adding that this share is now just below 50% following a restructuring that included an overhaul of Marqeta’s leadership. “That diversification of clients is incredibly important.”

Marqeta reported gross profit of $84 million in the most recent quarter, which was down 6% from about $89 million, year over year. Total payments volume was $67 billion, an increase of 33% from about $50 billion. Marqeta’s stock is trading at about $6 per share. That’s down from a peak of more than $30 in 2021.

Marqeta recently entered partnerships with Klarna to power the buy now/pay later firm’s payment card; and payment firm Rain, which supports earned wage access programs for Hilton, McDonald’s, Arby’s and Subway.  Marqeta also extended its collaboration with Uber Eats to Canada, Australia, Mexico, Brazil, Colombia, Peru, Chile and Costa Rica. “There is a flight to quality,” Pollak said, adding that potential clients are looking for payment companies that can demonstrate financial health. 

Amid this push to diversify its clients, Marqueta’s relationship with Block is growing, Pollok said. For example, Marqeta is involved with the expansion of Afterpay, a buy now/pay later firm that Block acquired in 2021.

Learning to pivot

Demonstrating profitability has been a “watershed” for MoneyLion, according to Dee Choubey, MoneyLion’s founder and CEO.

MoneyLion in its most recent quarter reported net revenue of $121 million, or 29% over the $102 million it reported the prior year. It also reported net income of $7.1 million in the quarter, up from a loss of $9.2 million the prior year. The New York-based MoneyLion was founded in 2013.

“The fintech industry is saying you can no longer fund multiple loss-leading products,” Choubey said. “That’s good for the overall industry and it’s good for innovation.” 

MoneyLion’s stock price fell from a high of more than $360 per share following its IPO in 2001 to a low of less than $10 in 2023. Its stock price has since recovered to about $80 per share.

Over the past two years, the company has pivoted to savings accounts, and away from a strategy that deemphasized consumer loans tied to future payments. The firm is also focusing on AI-powered product search. 

These efforts have helped it expand its customers from 7.8 million to 15.5 million in the past year. MoneyLion is currently testing technology that uses large language models to analyze transactions to improve recommendations and other content it delivers to its customers.

The company’s diversification strategy is relying on partnerships such as a February collaboration with EY that added MoneyLion’s embedded payments platform to EY’s U.S. division, supporting the consulting firm’s strategy to aid bank clients in digital automation projects. 

“We’ve shifted from a neobank to a platform business,” Choubey said. “You can engage with tools to find different types of products and tools without having to be a digital banking customer. We want you to be one, but you don’t have to be.” 

Moving faster in a crowded market

Despite the funding slowdown, the payments technology market may still have too many firms, a result of the flood of digital-focused startups during the pandemic.  

“There is some excellent intellectual property available but not enough market to support all the vendors who want to sell it,” said Aaron Press, a research director at IDC, who like McPherson said industry consolidation is likely.  

Some of the consolidation will come from the established vendors looking to replace legacy platforms or extend into adjacent spaces, Press said, adding that FIS’ strategy includes a desire for acquisitions. “And some will be combinations of smaller firms looking to create scale.” 

Verituity, a privately-held business-to-consumer and business-to-business payment company that was founded in 2020, recently increased its focus on selling discounted faster cross-border payments. It integrated with Mastercard’s portfolio of U.S. and international money transfer options to support a range of near-real-time business payouts that don’t necessarily use dedicated instant processing networks.  

“There is still some shakeout to go in the payments industry. There were a lot of payment companies created in the past few years,” said Ben Turner, CEO and president of Verituity, which is based in McLean, Virginia. 

To support its strategy, Verituity cited Mastercard research that found that 33% of consumers have experienced late or failed cross-border payments, potentially impacting cash positions, bill payments or other issues. The expansion of real-time payments presents an opportunity, Turner said, even if firms don’t adopt the two major U.S. real-time processing networks,  FedNow and/or The Clearing House’s RTP Network. 

“Instant payments are not as important as on-time payments,” Turner said, adding that non-real-time options can be less costly. “There are a lot of options that do almost the same thing as instant payments.”



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