Mastercard is nabbing red-hot fintech customers like Brex and SoFi from rival Visa. Here's the card giant's playbook for courting the deals.
- Fintechs like Brex, Dave, MoneyLion, and SoFi have all switched from Visa to Mastercard to power their payments.
- Mastercard formed a new fintech-focused team in February led by Sherri Haymond, executive vice president of digital partnerships.
- Part of Mastercard's draw, the fintechs said, is that it treats fintechs like any major enterprise client, with bespoke product strategies and consulting-like collaboration.
- Both Mastercard and Visa have platforms just for fintechs up and running on their payments rails.
- The networks don't differ materially in terms of where they can process payments. So courting fintechs often comes down to what the networks offer beyond that.
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When personal-finance startup Dave was considering switching its card issuer for a new product, the pitch from Mastercard came straight from the top.
The company was preparing to launch Dave Banking, a spending account with a debit card, and mulling its options. The fintech had established itself as an up-and-comer in the space — nabbing a $1 billion valuation and backing from the likes of Mark Cuban — but was still relatively young in its life cycle.
However, the youth of the company didn't stop Mastercard CEO Ajay Banga from taking Jason Wilk, cofounder and CEO of Dave, out to dinner in an effort to court the startup's business.
The effort left a lasting impression on Wilk, who ended up picking Mastercard to be the exclusive partner of Dave Banking, which launched this July.
"Starting so early on the relationship building, you typically only see that from a startup trying to find their first client, not from a company that is one of the biggest companies in the world," Wilk told Business Insider.
"That level of optimism from all the way at the top of a multi-hundred billion dollar enterprise has made us feel special and let us know we're building it with a partner that it's not about the short-term win. It's about the long-term relationship building," he added.
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Mastercard's aggressive courting of Dave isn't an outlier. The card giant has set its sights on fintechs in recent years in hopes of embedding itself with startups looking to become a core part of the next generation of financial services.
For a fintech, partnering with a network like Mastercard and Visa means it can offer consumers things like debit cards. And since Mastercard and Visa operate globally, these partnerships means that fintechs can expand their offerings outside of their base countries.
SoFi, Brex, and MoneyLion have all announced new products with Mastercard.
And it's not just a matter of nabbing business from red-hot fintechs. In gaining these clients, Mastercard is also stealing away market share from its main competition: Visa.
While both networks have seen declines in total volumes amid the coronavirus pandemic, Visa's market cap remains larger than Mastercard's. In the second quarter this year, Visa processed $2.5 trillion in payment volume and Mastercard processed $1.4 trillion.
But the networks don't differ materially in terms of where they can process payments. So courting fintech partnerships often comes down to what the networks offer beyond payment processing, from fraud prevention to consulting-like services for fintechs looking to scale.
A Visa spokesperson declined to comment for this story.
Mastercard created a team specifically for fintechs
One of the key people behind Mastercard's focus on fintechs is Sherri Haymond, executive vice president of digital partnerships at the card giant.
In her role, Haymond is responsible for Mastercard's partnerships and business development across all digital channels with US-based companies. That means managing the relationships with tech companies like Apple, Amazon, Google, Lyft, and Stripe, as well as digital merchants.
Over the past several years, Mastercard recognized that in the same way digital merchants' needs differ from traditional retailers, fintechs, too, require different service levels when they partner with Mastercard.
So in February, a new segment was formed within Haymond's organization focused specifically on Mastercard's relationships with fintechs.
"What we've learned, I think initially on the merchant side and now on the fintech side as well, is that these customers expect a different pace. It's very different from a traditional bank or a traditional retailer," Haymond said.
And having a dedicated team supporting fintechs keeps Mastercard up to speed on the latest needs of the segment.
"This segment alignment enables us to have a really good view into what the ecosystem needs from a product perspective," Haymond said.
Read more: SoFi dumps Visa and makes Mastercard its exclusive partner as it gears up to add a credit card alongside its debit card
Many of the account managers on the newly-formed team have fintech backgrounds in areas like product development and data science, Haymond said. So as Mastercard looks to add more fintechs to its network, its sales representatives are up to speed on the latest in the fintech space.
"Having that whole ecosystem view is enabling us to move more quickly from a deal perspective," Haymond said. "And it's also giving us a lot of insight to bring back to the product team to help the product team be building things, adding features, and also creating things for distribution in ways that this part of the ecosystem wants them to be distributed."
Startups treated like big-time clients
A big part of Mastercard's selling point, according to the fintechs, is that it treats them like any other enterprise client.
Fintechs that Business Insider spoke with didn't cite pricing or products as substantially different between Visa and Mastercard. In fact, none of the startups detailed any missteps or issues they had when previously dealing with Visa.
Instead, it's been Mastercard's ability to go above and beyond when working with fintechs.
"We've been getting support from Mastercard almost as if we were JPMorgan," said Henrique Dubugras, cofounder and co-CEO of $3 billion Brex.