The Missouri Leviathan: Watercolor, possibly by G. Tytler, ca. 1842. Public domain image from Wellcome Collection

The Marqeta house of cards may come tumbling down: an FBI investigation

could prompt MQ to lose up to 70% of its business. Future revenue looks

​ weak for this “dinosaur” of a payments-processing company

PUBLISHED MAY 22, 2025

J Capital Research ("J Cap") is a stock-research company. J Cap has analyzed the U.S.-listed company Marqeta (“MQ”) and is hereby publishing the outcome and the conclusions of our analysis, based on publicly available information. We may be short shares of MQ, and, for this reason, there might be a conflict of interest.

• Marqeta (MQ) is (mostly) a payment processor. MQ helps fintechs host their own payments tools by contracting with a Banking as a Service (BaaS) partner bank to manage client deposits. As the intermediary, MQ earns a small percentage of swipe fees. Small banks looking for growth generally enter into these partnerships, and those banks often rely on the middleman processor for compliance.
• A collapsing MQ would be just one more in a series of BaaS-related businesses to go under. Since the 2023 troubles at Silicon Valley Bank, Signature Bank, and Silvergate, regulators have cracked down on BaaS providers, and companies like Synapse, Solid, and Evolve have folded under the weight of compliance failures and regulatory scrutiny. Big banks are disintermediating companies like MQ. The model is dying.
• We have discovered an FBI investigation into MQ’s partner, Sutton Bank, likely for alleged anti-money laundering (AML) failures. MQ’s biggest client is Cash App, which has been credibly alleged to enable lawbreaking. Those allegations have brought intense regulatory pressure to the tiny Ohio bank on which MQ depends for its processing of Cash App transactions. [1]
• If Sutton folds or pulls out of the partnership, we think MQ will shrink to a mere shadow of itself. Former executives with several years managing MQ’s relationship with Sutton say a switch would take years and is practically impossible.
• MQ was once a pioneer of the BaaS model. The tide turned in summer 2023, when MQ’s largest customer, Cash App owner Block (formerly Square, XYZ), took back more authority over accounts and left the risky part—clearing transactions—to MQ. Since then, MQ is taking on small clients with high churn. MQ expects another hit to revenue related to Cash App later this year. Far from a one-and-done, the damage from Block’s redefinition of their relationship is ongoing.
• We think MQ is especially vulnerable to the squeeze on the BaaS sector. Former executives call MQ a “dinosaur.”  One commented, “It reminds me of AOL 25 years ago.”

[1] Sutton explains its relationship with Cash App here: https://www.suttonbank.com/services-tools/tools/prepaid-card-support.html?utm_source=chatgpt.com

• MQ’s regulatory headaches include potential bank liabilities for over 50 mln account holders
• MQ’s attempts to reinvent itself outside the risky Cash App processing business have not worked to sideline Block or Cash App. Revenue is excessively concentrated. New client wins like the Found Mastercard and Rain Card are small and niche, while onboarding times have ballooned from 150 to 200 days. MQ’s contracted backlog provides some preview of revenue, and that backlog has declined since Q1 2024
• MQ is obscuring its weakness with window dressing and an empty acquisition. We calculated a decline in gross profit margin for quarters when MQ reported growth in that metric. Nor has MQ actually reduced its dependence on a single client. MQ is consistently getting lower payments per transaction. A 2023 “pre-revenue” acquisition that cost almost $300 mln has done nothing for MQ.
• MQ hoped that higher-margin credit cards from the 2023 acquisition would make its technology relevant again. But formers tell us that MQ has a negligible credit card business, probably sub 1%.
• Executives are being pushed out, as MQ panics: Formers have told us that top executives are being fired for failing to sign new partners. MQ CEO Simon Khalaf “stepped down” in February 2025, the day the company issued its 10K, and has been replaced by an interim CEO. Before Khalaf, former CEO Jason Gardner stepped down as executive chairman in Q2 2024, apparently in a big hurry—he forfeited a whopping $167.3 mln in compensation.
• We think expectations will be disappointed in Q2 or FY2025: MQ has not taken into account the macro headwinds its partner Block sees. It claims lighter regulation, but evidence tells a different story. Cost cutting looks like it’s gone as far as it can.

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