Simon Khalaf, CEO of Marqeta
Today it’s time to meet Simon Khalaf, CEO of Marqeta. Marqeta is the global modern card issuing platform, which enables some of the world’s most innovative embedded finance solutions.
Over to you Simon:
Who are you and what’s your background?
I was born in Beirut to a Lebanese mother and an American father and spent time in all those locales while growing up. These contrasting experiences gave me an appreciation for the sense of stability that the US offered its citizens. I was inspired to embrace every opportunity that came my way, and after getting an undergraduate degree from the American University of Beirut, I moved to the US in 1989 to attend Syracuse University, where I earned a master’s degree in computer engineering.
After a short stint in consulting, I co-founded a company, Worldtalk Inc., offering a business communication tool. Since then, I have gained over 30 years of experience as an executive and entrepreneur in the technology space, and have been CEO four times, most recently at Flurry Analytics before it was acquired by Yahoo! I have also held senior executive positions at established public companies, Twilio, Verizon, and Novell, and was Chief Product Officer at Marqeta before becoming CEO.
I entered the world of fintech because I believe that the payment vehicle has finally become a digital product. This is exciting to me, and my vision is to move away from legacy payment solutions, which are slow, rigid, and lack control, and for payment cards to become the launchpad of a brand’s digital experience; in other words, the card is the new “homepage” of the digital experience.
What is your job title and what are your general responsibilities?
I am the CEO of Marqeta, and my job is to unlock the next level of growth and scale for our company. Day to day, this involves working closely with my product team, and Marqeta customers to provide an innovative, flexible platform to simplify payments for businesses. The team and I build, scale and distribute products that serve hundreds of millions of consumers and developers.
Can you give us an overview of your business?
Marqeta is a NASDAQ listed modern card issuing company, that enables embedded finance solutions for the world’s innovators. Built using an open modern API card issuing and payment processing platform, we provide instant access to highly scalable, cloud-based payment infrastructure that enables customers to launch and manage their own payment card programs, issue cards, and authorize and settle payment transactions.
Our real-time data insights and customizable platform eliminate intermediaries and enable our customers to offer innovative products rapidly, giving them a competitive advantage over traditional banking methods. For example, Marqeta recently announced a partnership with Scalapay, Southern Europe’s leading Buy Now, Pay Later (BNPL) provider, to instantly onboard accounts, and issue personalised cards to users both online and in-store. Scalapay merchants have seen a 48% increase in average order value, increased cart conversion, and decreased abandonment rates.
Tell us how you are funded?
Marqeta priced its initial public offering on June 8, 2021, and is a publicly traded company.
What’s the origin story? Why was the company started? To solve what problems?
Founded in 2010, Marqeta’s success story relies on founder Jason Gardner’s vision to simplify payments. Under Jason’s leadership, Marqeta evolved to essentially create the idea of modern card issuing. Our first customers included on-demand delivery providers, DoorDash, Instacart and Uber Eats. In these cases, drivers swipe Marqeta-powered cards when ordering, and the card is funded for the exact amount of the order when it’s approved. This helped establish us as innovators in the digital payments space, and our use cases now include digital and in-person payments experiences across a variety of sectors including fintechs, retailers and financial institutions.
In the last couple of years, Marqeta has continued to play a central role in the embedded finance trend and seize the massive opportunity in the space. We have announced additional partnerships with the likes of Groupe Rakuten France to offer a brand-new integrated payment solution and @Raiffeisen Centrobank to power its new brand, Raiffeisen Digital Bank , enabling customers in Poland and Romania to leverage a modern, comprehensive banking experience with streamlined digital accounts and debit cards.
Marqeta’s first quarter 2024 financial results spotlighted continued traction in card issuance, and our Total Processing Volume surged to $67 billion, representing a year-over-year increase of 33%, driven by major fintech customers expanding into new use cases and geographies and newer customers and embedded finance use cases. Embedded finance is a hotbed of innovation of which Marqeta is right in the middle.
Who are your target customers? What’s your revenue model?
Traditionally, legacy card providers have taken a year at least to launch a new card, but now, personalised cards can be spun up for new users instantly, allowing any company to embed payment cards into their brand experience. As a result, our target customers span a variety of sectors and companies and are essentially any company interested in initiating its own card program or embedding financial services into its offerings.
In terms of our revenue model for these customers, it’s like other card networks, as we collect a portion of every transaction completed through the platform. So, with every swipe and tap, there’s something called processing, where we authorise the transaction for the amount that’s being asked. We take money from the issuing bank, and we pay the network, and the network pays the acquiring bank, and the acquiring bank pays the merchant. So, we take a certain percentage of that transaction. Or, we take a SaaS fee in return for the value provided.
If you had a magic wand, what one thing would you change in the banking and/or FinTech sector?
I would like to see a change in the traditional credit underwriting process. Most underwriting decisions are still based on credit scores, which are linked to an individual. While credit scores are supposed to be dynamic, they are primarily based on historical financial behaviour. However, by relying on what’s in the rear-view mirror, the scores are outdated.
I don’t know about a magic wand, but I do believe that this will be revolutionised by the integration of genAI into credit underwriting. Underwriting essentially requires the analysis of large quantities of financial data and the detection of trends. By automating these activities with AI, we can take underwriting from being about a particular person to being about a specific transaction. For example, if a cardholder wants to fill up at the petrol station, the credit underwriting decision is made on that £100 specifically. In an instant, the genAI can look at the transaction amount, type of merchant, time of day, location, and recent transaction trends and break down credit decisions to a transaction at a time, not to a human at a time.
Quicker underwriting decisions could help facilitate greater access to credit and capital than would otherwise be possible. Removing from consideration what postcode they live in, what kind of car they drive, and even what their credit score is—it could go a long way toward levelling the playing field and creating greater financial access to a broader range of people.
What is your message for the larger players in the Financial Services marketplace?
Now that payment products are digital, we hold the key to the most addictive product ever built by humans. For example, if you look at the reach and engagement of TikTok amongst the adult population, it’s used, on average, 2.1 times a day. If you look at a payment card, it’s used 2.2 times a day. Shopping is the most rewarding sport for a lot of the population, and the payment card is the most engaging, and most distributed product.
It’s our job to utilise and revolutionise this product and service to benefit consumers.
Where do you get your Financial Services/FinTech industry news from?
- CNBC, I’ve been lucky enough to be on it a few times in the US and the UK. It provides valuable, real-time financial market coverage and business information, specifically around fintech investment.
- Forbes is also a great source for financial services and fintech news. It has great contributors, and you can find the information you need about the latest trends, as well as the top private companies transforming finance through technology.
Can you list 3 people you rate from the FinTech and/or Financial Services sector that we should be following on LinkedIn, and why?
- Marcel van Oost writer of the Fintech Europe newsletter
- Nicole Casperson, founder of Fintech is Femme
- Alex Johnson, founder of Fintech Takes
What FinTech services (and/or apps) do you personally use?
I’m a big fan of Apple. I must have passed this on to my teenage daughter because nothing can convince her that Apple isn’t her bank. She lives in a world where she hasn’t touched her plastic payment card, essentially since she got it, and if a store doesn’t have Apple Pay, she won’t go in. She represents a whole generation of people who have never been to a bank branch, and this ‘ iPhone generation’ wants to be able to pay seamlessly, digitally, and instantly with touchless payments through personalised services. Specifically for this demographic, I think Apple Pay will continue to boom. I like Apple products because they put consumer experience at the centre of everything they do, it’s also a very safe channel security-wise.
What’s the best new FinTech product or service you’ve seen recently?
Recently, I’ve been inspired by Accelerated Wage Access (AWA), which is essentially revolutionising the way millions experience the movement of money.
As the working population struggles with the rising costs of everyday items, innovation is needed to give workers back control of their finances and increased liquidity. AWA addresses this imbalance by enabling employees to get paid as soon as they’ve worked, instead of waiting until the next pay or invoicing period, helping to ensure better management of finances, without individuals having to turn to borrowing or credit. By using services such as AWA and BNPL, consumers can sidestep inflation and high interest rates on credit cards, and by opting for the zero interest alternatives, workers can be supported in their pursuit of financial security, well-being, and economic empowerment.
Building on this innovation, Marqeta recently announced that it will power the Rain Card, a branded debit card enabling Rain’s customers, such as McDonald’s, Taco Bell, Hilton and Marriott, to disburse earned wages onto cards seamlessly. In addition, through its strategic partnership with Rain, Marqeta can expand the scope of its early wage access offerings to add more value for employers across diverse sectors of the economy.
Finally, let’s talk predictions. What trends do you think are going to define the next few years in the FinTech sector?
The next few years in fintech will be defined by personalised, beautifully designed, embedded products.
When I was at Yahoo! I worked on the personalization of Yahoo! homepage which served as the frontpage of the internet for hundreds of millions of global consumers. It was the equivalent of printing hundreds of millions of newspapers each day, customized to each reader. I think we can do the same with credit.
The days of offering a one-size-fits-all credit card are in the past, and more and more brands are launching commercial card programs with highly personalized and tailored rewards for cardholders. These companies are harnessing the multitudes of data they have about each cardholder to spin up cards for new users and issue them instantly, with spend and credit controls catered to their individual needs.
By building payments directly into their brand experience and offering rewards and benefits customised to each person, the credit card can become the launchpad of the new digital experience for brands.
Thank you very much indeed for answering those questions, Simon.
Find out more about Marqeta’s services at www.marqeta.com and follow Simon here on LinkedIn: Simon Khalaf.
