The Marqeta IPO focuses on fintech rates

Marqeta, the debit card company that gets the most business through Jack Dorsey’s payment processor, will complete one of the largest listings for a fintech company this year. The 2008 financial crisis.

Late Tuesday, Marqeta priced the shares at $ 27 in the initial public offering, with two people on the subject reported raising $ 1.2 billion while achieving an implicit market capitalization of $ 14.3 million. The company surpassed the top of marketed prices, which was set at $ 24. Marqeta declined to comment.

The IPO adds several online and planned fintech listings to the online SoFi lender and Robinhood fee-free brokerage.

Located in Oakland, California, Marqeta creates branded debit cards and prepaid cards for corporate customers, the DoorDash delivery team and Swedish fintech Klarna, as well as Square.

Marqeta’s listing plan has drawn attention to the relationship between new U.S. fintech companies and small community banks, which have become increasingly close partners since the financial crisis.

Most of Marqeta’s revenue comes from exchange rates, the costs that merchants pay when customers use debit cards to make purchases.

Due to the Durbin amendment to the 2010 Dodd Frank Act, banks with less than $ 10 billion in assets receive higher exchange rates than larger transaction loans.

Fintech companies, such as Marqeta and Chime, a fast-growing personal finance application in the U.S., have taken advantage of this discrepancy by partnering with small community banks and making a fee reduction.

The largest partner in the market is Sutton Bank, which receives payment from the market in exchange for the exchange rate. The company also transfers a portion of its revenue from the exchange fees to Square and other customers.

Some analysts and investors have questioned the long-term viability of the setup, with the growth of fintech start-ups attracting the attention of regulators and large banks.

In a pamphlet, Marqeta warned that the exchange rate had undergone “intense legal and regulatory scrutiny” and said it was cooperating with banks that were exempt from the Durbin change.

“You can call it arbitration, you can call it a gap, the way you want it,” said Callum Godwin, chief economist at global payment consulting firm CMSPI. However, “it’s very likely to be something that would change in a few years, if it did,” he said.

Marqeta’s business has seen growth during the pandemic as blocked Americans turn to digital financial services such as Square’s Cash App and ecommerce companies such as DoorDash.

Marqeta doubled its net income last year to $ 290 million last year, reducing losses to $ 48 million last year. Square’s business in the first quarter accounted for 73 percent of Marqeta’s net revenue compared to the previous year. The deal with Marqeta Square has lasted until 2024, according to the company.

At Tuesday’s IPO price, which was 23% above the midpoint of Marqeta’s expectations, its market capitalization is more than triple the valuation received in May funding last year. Granite Ventures and Iconiq Capital were the largest foreign investors before the IPO.

Jason Gardner, CEO of Marqeta, has a $ 1.90 million stake in the IPO price.

Goldman Sachs and JPMorgan are currently bidding for the bid.