Intimacy of payment identity trust at heart of innovation acceptance
Of all the areas of finance he could disrupt, Marqeta Founder and CEO Jason Gardner picked the most challenging.
Marqeta’s platform, the world’s first fully documented, open API issuer processor platform, enables companies to develop and deploy physical cards, virtual cards and mobile wallets in a fraction of the time of other solutions.
While Mr. Gardner conceded there were plenty of challenges in developing the platform, the most crucial was not a software or marketing issue. It was entering into the intimacy of the payments process.
“There is a trust factor that is the foundation of how we interact at payment,” Mr. Gardner said.
When you pay with a credit or debit card, you are briefly giving control over an aspect of your identity, Mr. Gardner said. The card brand and the reward program associated with it describe part of who you are.
Then there is the whole issue of allowing someone to access your account. If you are paying at a store you frequently visit, you trust the merchant, and may even know their name.
Mr. Gardner used the example of his favorite restaurant. The staff knows him and he knows them. They know his favorite wine. When the bill comes, he does not even look at it due to the level of trust between them.
At a minimum, the way we pay is radically changing. More probable is our progression toward the ultimate seamless experience, the payment non-experience. We see it with fast track highway tolls and we see it with Uber, two solutions replacing mostly inconvenient payment experiences.
What Uber has done is maintain, and often increase, the trust factor of the cab payment experience, which admittedly is a low bar. Fumble with cash, wait for change, tip. Or wait for credit card authorization, or, heaven forbid, a cabbie with the shakes to set up the paper swipe over thing all the while with someone waiting to grab the cab.
Instant electronic confirmation brings the peace of mind formerly provided by a receipt. In the future facial recognition or sensor technology may play that role, Mr. Gardner suggests.
Before customers decide whether or not to trust a Marqeta client’s payment solution, the client has to first trust Marqeta. The open API infrastructure is key to building that trust, which is more challenging given most companies’ expected development pace, Mr. Gardner explained.
“The open API allows us to provide Silicon Valley innovation at Silicon Valley speed. We are in a whole new frontier of companies who want to build test and deploy as fast as they can.”
Those companies wishing to last have to embrace transparency at the level an open API provides. Yes, transparency, that alt-fi cliche. Companies know it is important to publicly embrace it, even though they have no actual plan to prioritize it, like watching a candidate fake his way through a debate.
“People want access to the product because ultimately it is their product,” Mr. Gardner explained. Potential Marqeta clients sign up for a sandbox, which is an isolated environment in which a program can be tested. Common transactions that client sees are tested in the initial design, and alterations are made to produce a more responsive result.
Those designs do not build off of legacy technology, Mr. Gardner added. They are a response solution from the initial step.
Developers also understand how modern, open source technology works, Mr. Gardner explained.
“An enormous amount of talent can help build the design. This is infinitely scalable software.”
At this point in development, the prospective client still has not signed a contract nor been charged for services.
“There is no contract until the product is developed,” Mr. Gardner said.
Contrast that approach with the guarded stance many peer-to-peer lending platforms take. The “trust us, there’s nothing to see here” approach has drawn regulatory attention while threatening industry credibility.
Take a need, build trust through actual transparency, and deliver a responsive solution. That is a solid recipe.
“We are solving a very hard problem that takes a tremendous amount of time and technology, but we’ve cracked the nut,” Mr. Gardner said.
Money 20/20 milestone
Marqeta has come a long way since the Money20/20 2014. During the conference, they announced deals with Affirm, Kabbage, DoorDash, and HyperWallet.
They also closed a $25 million Series C round which brings the total investment to $46 million. Existing investors 83North, Granite Ventures, and Commerce Ventures were joined by Affirm CEO Max Levchin, IA Capital and CommerzVentures. The new funds are allocated toward US market expansion, Open API platform development and a 2016 North American and European expansion.