Goldman Sachs-backed Marqeta rides payments wave to a $2 billion valuation

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A customer enters their pin number while making a chip and pin payment using a Visa payment card.

Simon Dawson | Bloomberg | Getty Images

The payments company powering Square, Instacart, and other popular start-ups closed a new funding round Tuesday that brings its valuation to roughly $2 billion.

Marqeta announced a $260 million Series E round led by hedge fund Coatue Management. Its earlier investors include Visa, Goldman Sachs, ICONIQ, 83North and Granite Ventures, among others. TechCrunch and the Wall Street Journal reported in March that the nine-year old company was in process of raising money.

The funding round will help Marqeta expand overseas — especially in Asia in Europe — and add new customers, CEO Jason Gardner told CNBC in a phone interview. Gardner said the round was over-subscribed, meaning it had more demand than shares available, a sign of growing enthusiasm for the payments space.

“Everyone’s been talking about ‘winter is coming’ and a slowdown in fintech investing for years,” Gardner said. “If anything it’s speeding up — everyone’s realizing how brittle much of the technology has been for a long time.”

Venture Capital deals space are steadily on the rise. Last year, VC funding for payments and processing grew to a total $4.4 billion — a 46% increase from a year earlier, according to PitchBook. PitchBook said in a recent report that a “decent portion of these venture investments come from incumbents such as banks and their venture capital arms, and we expect this to continue.”

There has already been significant M&A this year among the companies Marqeta is looking to complete with. In January, Fiserv announced it would buy First Data for a $22 billion. Fidelity National Information Services, or FIS, announced a $35 billion deal to buy Worldpay.

The Oakland, California-based payment processing and card issuing platform is what some might call the “plumbing” of financial transactions. The start-up makes money like incumbents Mastercard and Visa — by taking a percentage cut of every transaction from customers ranging from e-commerce to fintech. Square used Marqeta for a virtual debit card through Square Cash and for a plastic debit card it unveiled in January.

In the case of Instacart and DoorDash, Marqeta provides the debit cards drivers use to pay for the groceries in person. Because of the card’s technology, it won’t work if the driver isn’t in the right location and won’t authorize a card swipe unless it’s the customer’s exact amount, helping reduce fraud.

“We provide technology to the card to make sure that the right order, at the right time, for the right amount is being picked up,” Gardner said.

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