Marqeta Sees BNPL and Embedded Finance Boost Issuer Demand

Marqeta’s second-quarter results, released after the market closed on Wednesday (Aug. 6), took note of expansion opportunities in buy now, pay later (BNPL) markets, flexible credentials and embedded finance.

Total processing volumes of $91 billion were up 29% from a year ago. Net revenues gathered 20% year-on-year to $150 million. Shares were up 17% in after-hours trading.

Mike Milotich, interim CEO and CFO of Marqeta, said on the call with analysts that “one area of strength has been our continued broadening of lending and buy now pay later use cases … In the early days of our company, we were well ahead of other providers in connecting BNPL providers with retailers via instant issuance virtual cards, enabling seamless payment experiences without costly back-end integrations. While others eventually caught up on instant issuance, we continued to leap ahead, enabling BNPL providers with pay anywhere card solutions.”

BNPL and Flexible Credentials

Recent initiatives have included the launch of Visa flexible credentials, where Marqeta has been the first issuer processor to bring that functionality to the U.S. BNPL firm Klarna has also expanded its efforts with Marqeta, Milotich said, where the launch of the Klarna One Card has marked a move by the BNPL provider from three programs to 10.

“In the second half of this year, we will continue to innovate in BNPL,” Milotich told analysts, as “we have been building a new capability that leverages our issuing expertise and BNPL relationships to capitalize on evolving industry trends. This capability embeds within apps and allows consumers to receive multiple BNPL options at purchase while paying with their existing debit card, increasing both distribution and user engagement.”

Several partners are testing the service, eyeing a limited release before the 2025 holiday season and a broader launch next year.

Delving into value-added services, where gross profit more than doubled, according to commentary on the call, there’s been demand for real-time decisioning capability that is “issuer centric” and “allows customers to create rules and controls to manage transaction fraud based on the expansive and diverse underlying transaction information.”

About 40 customers contributing 20% of total processing volumes excluding Block are using real-time decisioning, Milotich said.

“We are actively enhancing this product with artificial intelligence and machine learning capabilities to help evaluate transaction risk in real time during the authorization process,” he told analysts.

Growth in Europe

Banking, lending, BNPL and expense management use cases are each growing over 100% year-over-year in Europe, said Milotich, and growth will be given further tailwind from the TransactPay acquisition that closed at the end of last month.

In Europe, he said, the business combination will “enable us to deliver more program management services for customers operating throughout Europe … [and] position us to support larger customers who are looking to have a single provider for processing, program management and EMI license.”

Overall, he said, “growth within financial services remained steady with last quarter, which means it is now growing a little slower than the overall company. Block growth within this use case remains as expected, and our fast growing non-Block new banking customers continue to grow approximately five times faster than Block.”

Growth in expense management offerings has been more than 30%, Milotich said. Full-year 2025 revenue growth has now been guided to be between 17% to 18%.

Asked on the call about growth in newer areas, Milotich said: “Now that we’ve settled in and … reached a certain level of scale, we can spend a little more time … moving horizontally, if you will,” and building out services around core processing.

“That’s important as we move more and more into embedded finance” with FinTechs that want a holistic solution, he said. “That’s why we’re doing things like building a white-label app.”