Who are Lithic's primary customers and how do they use the product?

There are certain use cases that are really well trodden. If you’re just doing a bolt-on offering in providing banking to your existing customer base and not really trying to do anything innovative there, sometimes we can help But most often we’re really good at being design partners to architect something really differentiated to your customer base.

Where that manifests itself is on sponsoring new card programs. We often see are folks who are building a neobank and scaling off of an all-in-one type solution, or they want to bring more payments in-house – and we’ll often slot in as the card processor. We’ll handle connecting to the networks, parsing the ISO 8583 message, PCI compliance, interfacing with card manufacturers, generating reporting as needed for reconciliation banking.

We will also play nicely with other primitives out there, for example, around compliance, transaction monitoring and KYC. The way we think about it is that walled gardens only get you so far in most industries. There’s all this innovation going on in other primitives that we’re never going to do, but we want to be able to work with them. Why would you ever want to close yourself off to that? A good analogue is really the power of open source. If you’re able to play well with other best-in-breed products, that's a win-win for everyone.

When we talk about card issuance, everyone always thinks about the neobanks. We do work with neobanks, but generally speaking, there are folks that are scaling and looking to bring more in-house, and we can play a really nice role in being a really good processor for them.

In some ways the most interesting use cases are the non-intuitive ones. For example, we work with folks on insurance claim disbursements. Historically, it’s gone through check or ACH rails and that results in a worse customer experience because the customer is fronting money while waiting for the claim, whereas the carrier or the insurance provider can generate a virtual card programmatically and send it to the end customer to pay the claim off. We’ll work with OTAs to fulfill flights and pieces of a purchase. We’ll work with companies that are focused on the incentive space, where maybe it’s unwieldy to send tons of payments via ACH or check and we can come in and help with cards.

Marc Andreessen famously said, “Software is eating the world,” and I think someone else said, “And payments is taking a bite of it.” I think that’s really apt, because what you’re seeing here with a lot of these software companies is they’re digitizing the back office, for example, and there’s an opportunity to launch a card program or to embed cards as part of the payment flow to improve the customer experience, to increase engagement and also to unlock new revenue streams. A really good example is a company here in New York that we work with, where they manage procurement and help streamline that across companies that have a bunch of different offices. Historically they’ve used check and ACH to fulfill payments for their customers. With our offering, they’re able to use cards. That’s a much better experience for everyone across the board, and it also unlocks a meaningful new revenue stream for them.