With Block Extensions in Hand, Marqeta Looks Toward Embedded Finance’s Future

With new extensions to the Block partnerships, Marqeta’s latest third quarter results also underscored momentum in buy now, pay later (BNPL) and accelerated wage access.

CEO Simon Khalaf said on the call to discuss earnings Tuesday (Nov. 7 ) after the markets closed that “We saw our business continue to build momentum, signing new embedded finance customers and expanding with our current customer base.”

Total processing volume, as detailed in company materials, was $57 billion, up 33% year over year (YoY).

Revenues slid 43% YoY to $109 million, on a net basis, reflecting the impact of an accounting charge related to Cash App.

Khalaf said on the call that the company renewed the agreement for the Square debit card for five years, to run through June 2028. In addition, the company extended the deal with Cash App to run through June of 2028, as well — cementing what he called a “baseline” of activity.

“Finally, we agreed with Block that Marqeta will be the default provider of issuing processing and related services in current or future markets outside of the U.S. where Block may decide to enter and where Marqeta is able to provide issuing and processing services,” said the CEO.

Embedded Finance’s Potential

As for embedded finance, Khalaf said that companies are looking to use that option to “create a better customer experience and keep funds within the ecosystem.” He offered up the example of a logistics company that will have the ability to offer a Marqeta virtual card with instant refund disbursement to encourage “respending” at the eCommerce partner’s website when items are returned.

He noted later in the call that BNPL programs require the ability to offer a consumer card, and thus Marqeta “is uniquely positioned” to help with that card issuance.

CFO Mike Milotich said on the call that “the financial services vertical, which is a little over half of our TPV [total payments volume] continues to perform well,” and stated that Marqeta lending, including buy now, pay later growth, accelerated more than 20% sequentially, faster that the overall company’s growth rates.

“The rapid consumer adoption of several of our BNPL customers of ‘pay anywhere’ solutions, which deliver their BNPL value proposition on a card that can be used at any card accepting merchant on demand delivery growth accelerated this quarter,” he said.

During the question-and-answer session with analysts, management noted that some use cases, such as accelerated wage access and consumer focused BNPL offerings, may be relatively small but are growing quickly enough to make a difference — accelerated wage access, by way of example, in terms of volume, doubled sequentially in the third quarter.

“We actually have done something unique in which the balance sheet of the employer or the marketplace is deployed,” said Khalaf, who added that, with accelerated wage access, “we’re effectively deploying the working capital of large employers on behalf of the employee without incurring significant or increasing their debt stack.”

“That’s why we are some large employers adopt our solution, because you’re not actually bringing in a lender at high interest rates,” he continued. “It’s good for the employer because they’re getting the loyalty of the employee, and good for the employees because they get paid immediately. And I think it’s good for the ecosystem because you’re not actually pulling in expensive working capital.”

Investors bid the shares up 9% in after-hours trading on Tuesday.