Marqeta Founder & CEO Jason Gardner joins Yahoo Finance to discuss the company’s first successful quarterly earnings beat that benefited from growing interest in the buy-now-pay-later service, Amazon’s adoption of the buy-now-pay-later payment system, and Square’s effect on Marqeta business.
BRIAN SOZZI: Many in the buy now, pay later space are seeing a stock price boost following Affirm's new deal with Amazon. One of those named is Marqeta, with shares up about 7% so far in today's session. Unlike others though, Marqeta actually does business with Affirm.
Joining us now for more is Marqeta founder and CEO, Jason Gardner. Jason, good to see you this morning here. So as I mentioned, you in fact do business with Affirm. What do you do with them, and how does this Amazon deal that they struck, how does this impact you?
JASON GARDNER: Well, we're very happy to power Affirm in their buy now, pay later solution. So what we do is we help companies like Amazon, Klarna, Zip, Afterpay basically, connect to the point of sale. So think of us as like the last mile. We call it a server-to-server virtual card. So when you're a consumer and you want to buy now, pay later with Affirm or others, it generates a 16-digit card and that card could be Visa or Mastercard, that's then inserted into the checkout flow which makes it very easy for the buy now, pay later companies to set up with merchants. And really allow them to sign up and move pretty quickly in regards to options for consumers.
BRIAN SOZZI: And Jason, I was talking to some folks this morning on just how much of a financial impact this will have on Affirm but by extension, it has to have a financial impact on your business as well, no?
JASON GARDNER: Well, we're very proud to power Affirm, helping them. Really they're penetrating the largest e-commerce company in the world. We power a number of solutions for Affirm, Klarna, Afterpay, Zip as we talked about. And we don't go specifically into how we power them or which-- I'm sorry, which merchants we power them with but we're excited to have them as a customer.
MYLES UDLAND: So Jason, can you talk about being this last mile connection of a sort between online transactions. I'm curious, and I think this is a question that people generally have about this new payment method, whether it is BNPL whether it's just an in-house credit solution for a certain merchant, so on and so forth. Are you guys taking on any of the credit risk in that or are you helping to just facilitate the transaction between the two parties, how do you fit into that?
JASON GARDNER: Yeah, so we don't take on any credit risk. We're really just facilitating the two parties working together. And buy now, pay later is 40% of Americans used this method last year. If you look at Europe, there was a European phenomenon, companies like Klarna invented this and then came to the United States.
Think of it as like reverse layaway. So the way layaway had worked is the good, what are you looking to buy, sits at the merchant. And then when you pay it off you receive it. Now we've reversed that with buy now, pay later. We're getting the product or the good in advance and then you're paying it off over time.
Now, consumers have to pay their bills. That credit is provided by Affirm. And again, we're just facilitating the two parties and making sure that they can streamline the checkout method.
MYLES UDLAND: Jason, you guys, you had your results about three weeks ago. You came public via an IPO this year. I'm just curious, you know, what that process was like with this environment? You know, we're talking about companies-- different industry but a company earlier today announcing a fundraise and a valuation 3x what it was six months ago.
You know, there's a lot of appetite for new businesses. And certainly, you've had interactions with the Street over the last several months. What has that process been like for you guys trying to balance both the fundamental growth of your business but certainly the investor enthusiasm for companies in your space and new companies generally?
JASON GARDNER: Yeah, so we started the company back in 2010, and fintech or financial technologies wasn't even a thing and nobody was really talking about it. And companies like Marqeta that built an open platform for companies to build payment cards, whether Visa or Mastercard cards. And we found that our technology allowed companies to disrupt entire industries or solve enormous problems at scale.
So companies like Instacart, when their shopper goes into the store, they swipe that card to pick up your groceries, we get the message from the point of sale, we deliver that to Instacart. And Instacart basically goes through that message, is the shopper on shift or in the right merchant at the right time, is it a right amount based on the basket size? And then they tell us to authorize the transaction on their behalf. So we do that millions of times a day. We allow these companies to scale pretty significantly.
This technology called issuing of processing is very deceptively complex. And we see this within the financial technology space. We decided 18 months ago we wanted to become a public company. This was very much a personal decision for me as the founder and CEO. And then really six months before you go public, you get really deep into the process and it was a great journey. We're really happy to be a public company. We felt like this is the next step in our journey.
And now we're finding I mean, wow, the amount of venture capital that is really flowing into these companies and massive valuations. I think it shows that we're in the very early innings in regards to the opportunity, not only within the space but really where the world is going, which is all this volume is living on legacy platforms and moving to modern platforms like Marqeta.
BRIAN SOZZI: And Jason, a lot of focus continues to be on Square, with that $29 billion purchase of Afterpay. Square, from the numbers that I have seen accounts for about 72% or 73% of your business. Does it make more sense for your company to be under that Square umbrella?
JASON GARDNER: Well, Square is 73% of our business as we said in the S-1. And what we've seen is they've adopted many different areas of our platform both on the consumer side with Cash Card. We also power all of the ACH there. We also power the card on the Square Card side.
We just recently announced that Square is using our checking solution on the merchant side. And we see like their success is our success. We're seeing them adopt many different areas of our platform. You talked about the acquisition of Afterpay or the upcoming acquisition of Afterpay, it hasn't closed yet. But Afterpay is not a top-five customer of Marqeta. They use a different part of the platform. But this shows the power of modern card issuing. This shows the ability for Marqeta to service many different facets of our customers. And we want Square to continue to grow and service them obviously into the future.
BRIAN SOZZI: Fascinating time to be in this space. Marqeta founder and CEO, Jason Gardner. Looking forward to staying in touch.
JASON GARDNER: Thanks, Brian. Appreciate the time.