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Nikil Konduru, GTM Strategy at Lithic, on the future of card issuing

Jan-Erik Asplund


Nikil Konduru runs GTM Strategy at Lithic and was previously an investor with Nyca Partners. We talked to Nikil about Lithic's approach to partnering with embedded fintech and banking-as-a-service companies, how he think about the future of issuer processors, and the next 5-10 years for fintech.

Sacra Highlights

Yeah, that's right. We love Shamir and the Sila team and work with them to support a number of joint customers. Sila does an excellent job at ledgering and at ACH money movement. 

We recently announced our Integration Partner Program at Lithic, where we work with the best fintech infrastructure providers out there to build joint solutions for our customers. Sila, Canopy, and Wyre were our first partners. Just this month we announced that Dwolla and Peach had also joined the integration program. I’ll add that it's very easy to say, "Hey, we have a partnership with so and so and we have a neat referral agreement." But we’ve gone much further than that: We're providing technical integration guides for our joint customers, we're mapping end to end funds flows, and we’re allocating engineering resources to removing frictions in these joint implementations. Our philosophy is that the future of fintech infrastructure is in modular, interoperable APIs. In the purest sense, we're looking to partner with fintech infrastructure that can augment our clients' value propositions or accelerate their speed to market. If there's something that those providers do best, better than anyone else, we want to partner with them so that our clients can reap maximum benefit.

Every post-Marqeta BaaS and issuer processor claims to be developer-first and developer friendly. What does that mean to Lithic and how does Lithic differentiate among the new breed of developer/API-first products?

I could say a number of things here. That being developer-first to us means having an easy to use, clear API with no bloat. That our technical teams offer high-touch support to customers of all sizes. And that Lithic’s API is highly unique because it was built with developer-experience in mind from its inception - after all, we were our own first customer (

But frankly, me saying all of that still shouldn’t convince you. We’d rather put our money where our mouth is. Jeff Lawson, the legend, said it best: “Ask Your Developer”. If your business is exploring card issuing, have your developers check out Hear what they have to say.

Lithic seems to take a low-touch, self-serve approach for developers. How do you think about balancing the trade-offs between lower ACV and more sales efficiency?

We’ve invested a lot of time and resources into building out the self-serve experience for developers. Many of the larger players in our space have been avoiding the long tail by choice because the implementation complexity of their solutions makes whale-hunting the only viable option. Meanwhile, the entire Seed-Series C segment has been overlooked and this has stifled innovation. We think that with our self-serve, developer-friendly tools, we can address that entire audience, and give them access to more powerful tools over time as they grow. We have some transacting customers today that we're confident will grow to the size of a Brex, DoorDash, or Klarna one day.

I'm curious about team and culture at Lithic. If one of your friends was joining Lithic, what advice would you give them to succeed?

In my mind, we probably have one of the friendliest workplace cultures in Fintech right now. Our weekly standup meetings are always a perfect balance of debriefs, memes, and CTAs (with some riffing in the chats). I think it stems from the very top. David, Bo and Jason, who started the company back in 2014, have that rare combination of being face-meltingly smart while also being down-to-earth. It really helps set the culture for the org. We’re all out here doing our best work but not taking ourselves more seriously than needed.

To a friend or new colleague, I’d recommend bringing their whole self to work. We’ve built a pretty great neighborhood around here and you really do get back what you put into it, tenfold.

Are there other ways in which Lithic's origin in influences how Lithic works and how you approach card issuing?

Absolutely. Having grown out of and actually dogfooding our own card issuing infrastructure, Lithic has benefited immensely. Privacy has been around six plus years and has a really rich history. Over that time we've managed to identify, resolve and optimize for thousands of different card issuing edge cases. As a result, the Lithic platform today is battle tested. It's proven itself to be highly scalable and resilient. It’s processed billions of dollars in card payments across millions of cards. Our roots in are what allow us to confidently serve Lithic customers of all sizes today.

Is there an operating philosophy that is shared by everyone at Lithic and carried through to the customers and to the product? Amazon, for example, is known to be super customer-centric and obsessed with cost.

We have some killer guiding company values. My personal favorite of these is ‘Ask why, learn why’ – this is the idea that our impact is greatest when we understand the motivations behind the things that we do, and what’s possible within the industry. Everyone at Lithic is empowered to ask why something is the way that it is and why it couldn’t be done in a different way. We believe these conversations are critical towards developing more innovative, more flexible products for our customers’ diverse use cases. It’s funny you should mention Amazon. We like to apply their one-way vs two-way door framework for decision-making: A two-way door allows you to change course if early signs suggest that you really should’ve gone down another branch of the decision tree. One-way doors however require firm commitments and can’t be walked back. Consequently, one-way door decisions require a lot more time, consideration and Exec. team input whereas with a two-way door, we’re primed to optimize for iteration speed and tight feedback loops. This framework basically serves as a helpful heuristic to identify critical junctures while still keeping us as nimble as possible.

Do you have any thoughts on the policy side around interchange and how changes to the Durbin Amendment might affect the state of play in BaaS?

The U.S. still has one of the most favorable interchange regimes and I don’t think that anyone can reliably say that this is going to change any time soon. Durbin-exempt consumer prepaid/debit interchange is still holding steady at ~140bps. For reference, in Europe you'd get about 20 to 30 basis points for consumer card programs. The situation is a bit better for European card issuers that generate commercial volume. They’d earn closer to 1.50%, give or take. But even then, that’s materially lower than what you’d get in the U.S., at north of 2.50%.

A lot of commentators have hypothesized that this is a risk to the long-term unit economics of the industry, that rates will eventually normalize globally. It’s always a distant possibility, but I don't think we should hold our breaths. I’ve always thought about it as a collective action problem. You have a small set of powerful issuers on one side, you have the two networks in the middle playing arbitrator, and you have millions of merchants on the other side. The issuers want to keep interchange high and are pretty well organized to lobby for their collective interests (they can also shop their volume between the two networks). The millions of merchants would prefer to keep interchange rates low, but each of them individually has only very limited volume, and thus very limited voice.  

You still see the giants like Walmart, Costco, Amazon, Facebook, and Google independently negotiating with Visa and MasterCard and working out custom interchange rates. But there's the long tail of millions of merchants that aren't ever going to have the muscle to do the same.


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