How does Lithic compare to its predecessors as well as current players such as Fiserv, FIS, and Marqeta?

There’s a lot of noise in the space in terms of different companies trying to do different product marketing. It’s not to say people don’t have real stuff, but there’s a lot of mixed messaging. I’ll do my best to share my perspective here.

Starting chronologically, Gen 1 was like the Fiservs, the FISs -- companies founded in the 80s. To keep things in perspective, 80% to 90% of card volume still flows over these folks today, so they’re very much relevant. Despite all the news around newer folks like us and others, they’re still very much the standard. Then you fast forward to 2000, and you have Galileo and ITC. I think of them as really Gen 2. They’re more modern and nimbler than Fiserv and FIS, but they’re still running on Oracle even today and definitely not in the cloud.

Gen 2.5 is what I think of as Marqeta, and I think of us as Gen 3. The reason why I call Marqeta Gen 2.5 is not to be unnecessarily disparaging. It’s really that I think of what they’re doing compared to the ITCs and the Galileos as fundamentally the same business model, the same enterprise go-to-market strategy, but better technology. The net-net there is: when you have the same business model and the same go-to-market, but improved technology, it’s an incrementally better experience. You don’t get this transformational or magical experience around card issuance, like what you see on the acquiring side. That’s how I think about the issuing landscape.

A lot of people think we’re competitive with BaaS. I think maybe on the edges we are, but oftentimes a customer will come to us, and we’ll be like, “Oh, this is actually not a customer for us. This is a BaaS customer.” It’s quite rare for there to be a customer where we say, “Oh, this is a customer where it’s absolutely not clear if they should be BaaS or should be working with Lithic.” There’s usually a pretty clear distinction. What I say is, if you’re trying to launch a neobank and you don’t really want to have any interaction with the bank, you should probably go with a BaaS provider who will help you get set up. Whereas if you’re a scaling banking company or neobank with complex needs and a lot of different use cases around card manufacturing, compliance, transaction monitoring, custom KYC, and if you’re really looking for a modular solution, you’re probably not best suited to go with a BaaS solution, which is effectively an all-in-one option.

BaaS present a really great partnership opportunity, and there’s a win-win here. We work with one today and are in pretty active conversations with a few others.

The big thing for me is there’s a lot of competition, but you don’t get this magical experience by offering the same business model, the same go-to-market. Take a step back. If you think about the anatomy of a card transaction, you’ve got acquiring on one side and issuing on one side. Issuing is at a stage that acquiring was at five to seven years ago. What’s really exciting about what the Stripes and Adyens of the world did was they approached acquiring in this way that abstracted away a lot of the complexity and made it super accessible, but retained a lot of how powerful it was. Maybe they talked about APIs and stuff like that, but at the end of the day, what’s really interesting there is that it's a really powerful primitive on acquiring. In doing what they did, the net effect wasn’t that they took a ton of market share necessarily from incumbents. They actually expanded what the world of acquiring looks like. I think there’s a similar sized opportunity if we’re able to abstract away complexity and make these really powerful primitives accessible.