Marqeta, Inc. - MQ

New investigation shines the light on their largest revenue source

https://www.nbcnews.com/business/personal-finance/whistleblowers-cash-app-leaves-door-open-money-laundering-terror-rcna138958

A story this morning by Gretchen Morgenson shines a light on whether or not Block’s (SQ) Cash App P2P money transfer service is being used for money laundering purposes, among other things. The link to the NBC news story is above.

Marqeta (MQ), as I related in my original piece last month, derived 50% of Q3’s revenues from SQ after an accounting change related to Cash App reduced that overall percentage from 78% in Q2. As I also showed in my spiel, MQ’s business outside of SQ has been stagnant for several quarters.

As the company relayed on their most recent conference call:

First, we renewed our agreement for the Square debit card for 5 years to run through June 2028.

Second, in parallel, we extended our deal with Cash App so that, that deal also extends through June 2028.

The NBC News story also spelled out Marqeta and some of the potential risks:

Lax due diligence on Cash App customers poses risks for shareholders of its parent, Block Inc., the enormous fintech founded by Jack Dorsey, co-founder of Twitter, the whistleblowers said. Ditto for Marqeta Inc., a financial technology startup that acts as a middleman transferring funds for Cash App transactions, and Visa Inc., whose name is on the Cash Card. Shareholders of all three companies have not been fully advised of the risks associated with the Cash App business, the submissions contend.

How this all winds up impacting MQ or SQ at this point is unclear, but increased regulatory scrutiny is rarely a path to greater profitability.

It’s unlikely this is the last we will hear about this.