Interchange Turned Into Software Revenue

Lower card issuing barriers turned interchange from a bank product into a software feature. Instead of spending a year wiring up a sponsor bank, processor, and network, startups and vertical SaaS companies could launch virtual or physical cards in weeks, then earn a slice of merchant fees every time customers spent. That is what opened the door for products like Mercury, Juni, and trucking or procurement workflows to use cards not just for payments, but for acquisition, retention, and embedded workflow control.

• The stack got modular. Marqeta handled enterprise card issuing, Lithic pushed card issuing to the long tail of developers, and all in one BaaS platforms bundled bank relationships, compliance, and operations. That meant a founder could buy card issuing as infrastructure instead of building it from scratch.
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• The revenue model was powerful because the software company could give the card product away and monetize on interchange in the background. In B2B, commercial card economics were especially attractive, with the fintech often keeping more of the fee than the infrastructure layer.
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• Brex later showed the next step up the curve. Once companies wanted global card programs, underwriting, fraud control, and local issuing in many countries, simple middleware stopped being enough. That is where owning more of the stack became a real advantage, especially in enterprise and embedded partnerships like Navan and Coupa.
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Going forward, embedded card issuing keeps moving from generic fintech into vertical software. The winners are likely to be the companies that pair card rails with a concrete workflow, travel booking, procurement, fleet, ads, or banking, and use interchange to subsidize software while deepening product lock in.