Card Issuing for the Long Tail
Banking-as-a-Service: The $1T Market to Build the Twilio of Embedded Finance
This split in card issuing points to the market moving from whale hunting to software distribution. Marqeta and Galileo proved that API based issuing could support giant programs like Cash App and Klarna, but their sales motion stayed enterprise heavy. Lithic and Highnote pushed the next step, building self serve and modular tools so smaller fintechs, vertical SaaS companies, and digital products could programmatically create cards, set spend controls, and launch narrower use cases without buying a full banking stack first.
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Lithic centered its product on fast developer access and composability. It positioned BaaS platforms as off the rack kits for fast launch, while Lithic fit teams that wanted direct control over issuer processing, bank relationships, KYC choices, card manufacturing, and custom transaction logic as they scaled.
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Highnote aimed at a similar opening, but with a more vertically integrated build. It combined processor, program management, and ledger, trying to give mid market and digital enterprise customers a modern stack without forcing them onto legacy processors or a reseller layer built on top of i2c, Galileo, or Visa DPS.
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The long tail matters because embedded finance customers are usually smaller individually, but there are many more of them and they are less likely to create Marqeta style concentration risk. Point solutions that plug into other tools can spread revenue across many programs, even if each program starts with lower volume.
From here, the winners are likely to be the issuers that turn card infrastructure into a standard developer building block. As more software companies add payouts, expense controls, rewards, and vertical specific payments into their products, card issuing should look less like a custom enterprise integration and more like payments API infrastructure with broader distribution and lower concentration risk.