Visa Cryptocurrency Partners

Will Crypto Be a Game Changer for This Growth Stock?

Will Crypto Be a Game Changer for This Growth Stock?
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market (NASDAQ: MQ) Last week, she revealed some interesting news: she said she would be working with several crypto-related companies, including Shakepay, Fold and Coinbase, To create Visa cards that allow users to spend their cryptocurrency everywhere Visa is accepted.

The move is huge, and it strengthens the Marqeta platform, which it has already formed partnerships with ConfirmsAnd by dashand Instacart and Square. This is also important news for cryptocurrency holders, which creates another way for them to spend their cryptocurrency in the same way that they spend traditional money.

Image source: Getty Images.

What Marqeta does and why Coinbase chose it for its next card product

Among other things, Marqeta creates customizable spending cards for any number of businesses, like the ones mentioned above, as well as for more popular players like Goldman Sachs And the alphabetGoogle. The company has an impressive array of partners who have turned to it because of how it has revolutionized spending cards.

Companies turn to Marqeta because it can make cards in a fraction of the time it takes traditional card issuers. Not only that, but Marqeta products can help reduce fraudulent transactions due to what are known as dynamic spending controls. This feature gives Marqeta partner companies the ability to set spending limits on cards that can limit transactions to specific sellers, certain dollar amounts, or to specific locations.

This feature has proven to be important in the cryptocurrency ecosystem, which still makes routine purchases of products and services as easy as traditional currency.

“Coinbase set out to allow our customers to seamlessly spend cryptocurrency anywhere, and Marqeta has enabled us to turn our vision of a crypto-backed debit card into reality,” said Munib Imtiaz, Product Manager who leads Coinbase’s card segment. .

Huge addressable market for spending cards – Crypto can inflate it

Marqeta generates revenue from things like exchange fees, processing fees and other fees when its cards are swiped, and it gets other income from creating and shipping physical cards to customers. During the first six months of 2020, the company reported net revenue of $230 million, a 95% increase over last year, and a gross profit of $97 million. Meanwhile, processing volume totaled $50.5 billion in the first six months of this year, up from $24 billion last year.

Investors may be concerned about Marketa’s growing losses. In the second quarter, the company posted a net loss of $68.6 million, compared to a loss of $7.1 million in the same quarter last year. CFO Trip Vix said the loss growth “was largely driven by compensation-related costs to reinvest them back into the business to support future growth.”

During the quarter, stock-based employee compensation expenses were $55.5 million — largely as a result of the company’s initial public offering in June. While the company posted a bigger loss compared to last year, it did get well funded with $1.7 billion in cash and cash equivalents – $1.3 billion of which was raised from its initial public offering, which should cover losses in future periods as it continues to expand. and build its work.

During the second-quarter earnings call, CEO Jason Gardner said the global payments market is $74 trillion — with $30 trillion of that related to cards. In the first half of 2021, Marketa processed $50 billion in transactions, and is on track for nearly $100 billion this year, which is still a small portion of the market. Meanwhile, customer demand for cards linked to cryptocurrency is increasing. Visa, which issued several crypto-related cards with other partners earlier this year, reported spending $1 billion on these cards during the first half of 2021.

Marqeta’s foray into cryptocurrency spending cards is another big step for the startup, and the move helps it leap into what is sure to be a growing share of the payments processing market. This, along with an impressive client list, makes it hard for me not to get excited about the innovative payments company.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of the Motley Fool Premium Consulting Service. We are diverse! Asking about an investment thesis — even if it’s our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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