Zeta enters into global partnership with Mastercard, eyes $300 mn in revenues through tie up

Bhavin Turakhia, co-founder and CEO of Zeta

Banking technology provider Zeta has entered into a five-year global partnership with Mastercard to jointly launch credit cards with issuers globally, the company said on March 7.

As part of the deal, Mastercard has also made an investment in the company that turned unicorn in May last year after receiving a $250 million funding from Japan's SoftBank Vision Fund 2.

Founded in 2015 by serial entrepreneur Bhavin Turakhia and Ramki Gaddipati, Zeta is a SaaS (software as a service) company that provides banks and fintechs the technology stack to launch card programs, including interface for processing, issuing, lending, core banking, and mobile apps.

With Mastercard’s support and capabilities in digital issuance, fraud and risk, loyalty solutions and more, Zeta aims to take the credit card processing industry from the age of fragmented, multi-vendor systems to nimble, composable, single-vendor systems that are responsive to changing cardholder needs and preferences, the company said in a statement.

In an interview with Moneycontrol post the announcement, Turakhia said that Mastercard’s investment was part of a $30 million fundraise which included other investors as well. He also shared the targets the company plans to achieve through the partnership.

“Our objective is to jointly power 30 to 40 million credit cards in the next five years on our stack. We are looking to process Total Payment Volumes (TPV) worth around $60 billion through our system,” Turakhia said.

With both partners pre-configuring key capabilities behind the scenes, issuers will now be able to launch cards much faster, making it easier than ever to rapidly design and launch flexible, customizable card programs.

While Turakhia did not share details on the company’s current annualized revenues, he said that through the partnership with Mastercard, Zeta will be able to add $300 million in revenues in the next seven years.

However, within India Mastercard has been barred from onboarding new customers by the Reserve Bank of India (RBI) after the card network failed to comply with the domestic data storage norms.

“We are certainly waiting (for the ban on Mastercard to be lifted) and have been given assurances by Mastercard that the issues should be resolved shortly. However as a platform we are network agnostic, so are Indian customers are not impacted,” Turakhia said.

Zeta focuses on 300 banks and 1,000 fintechs globally to onboard as clients. Turakhia believes that Mastercard’s partnership will help the company make inroads into over 100 banks and 100 fintechs. The focus markets for the tie-up will be North America and India.

"As people shop and bank online more than ever before, Mastercard is partnering with Zeta to provide issuing banks and fintech innovators with modern credit card processing capabilities at scale that will maximize the safety, security and convenience of e-commerce, online banking, and contactless transactions," Sandeep Malhotra, Executive Vice President for Products & Innovation, Asia Pacific, Mastercard said in a statement.

By deploying Zeta’s credit processing stack, issuers will have an opportunity to grow their user base, drive higher usage and enter new geographical markets, while accelerating the cashless revolution around the world, Malhotra added.

The partnership between Zeta and Mastercard began in 2018 when the former joined Mastercard's global startup engagement program Start Path. Zeta also recently joined the Mastercard Developers Partner Network -- Engage. Through Engage, Zeta will gain access to the Mastercard network to pre-integrate or bundle products and services, including Mastercard’s Digital First and Fintech Express programs. The programs will look to provide instant customer KYC and verification, instant digital card issuance, provisioning, and usage.

Most of Zeta's revenue comes from French food services and facilities company Sodexo, which is also an investor in the company. Besides Sodexo, SoftBank and now Mastercard, Zeta has not raised any funds from external investors in seven years of its operations.

Turakhia and Gaddipati's previous businesses -- — messaging platform Flock and website aggregator Directi — haven’t raised money from external investors.

Zeta has 1300+ employees with over 70 percent of them in technology roles across locations in the US, UK, Middle East, and Asia. Globally, eight issuers and 30 fintechs have issued over 10 million cards on Zeta’s platform. In India, the company says its clients include HDFC Bank, Kotak Mahindra Bank, Axis Bank, IndusInd Bank, Yes Bank and RBL Bank.