Your roadmap to card issuance: a guide to all things cards
What is card issuance?
Card issuance is where a company, normally a fintech, wants to launch a card under their own branding to their customers.
What types of cards can be issued?
There are three types of cards that a company can issue:
- Debit cards – These are directly linked to an individual's bank account. Each transaction made using a debit card deducts funds from this account, acting much like a digital cheque.
- Prepaid cards – They are loaded with a specific amount of money by the user, functioning as a kind of digital wallet. While they can be linked to a bank account, it's not a requisite.
- Credit cards – Unlike debit and prepaid cards, credit cards operate on a credit model, allowing the cardholder to borrow funds up to a pre-set limit from the issuing company for transactions. The borrowed funds are then repaid, typically with interest, over a period of time.
How does the card issuance process work?
To start, the fintech will require partners to assist with the launch, support, and regulatory requirements of issuing cards; some partners will offer a combination of these services.
- The fintech will need a card scheme, which requires working with either Mastercard or Visa as your payment network.
- If the fintech is not regulated, they are required to work with an intermediary – a BIN sponsor – to follow the rules and regulations of the payment network.
- Then the fintech needs a card processor to handle the card transaction messaging and make sure that the message of request when using a card is sent correctly.
- And, finally, there is the card manufacturer who will create the physical cards to specification.
What is the difference between physical and virtual card issuance?
Issuing physical and virtual cards shares many similarities, the differences mainly lying in the personalisation process and the absence of physical delivery for the latter. When a virtual card is issued, the card number, expiry date, and CVV number are made available within your app, limiting its use to online ecommerce transactions.
However, virtual cards aren't restricted to online use. By utilising tokenisation and integrating them with mobile payment platforms such as Apple Pay or Google Pay, they can be transformed into a payment method for in-store purchases.
What role do financial institutions play in card issuance?
Financial institutions might not be directly involved in card issuance, but they play integral roles in facilitating related processes. They are instrumental in critical aspects of the process, including card manufacturing and personalisation, account management, transaction processing, compliance and customer service.
How long does it usually take to issue cards?
The timeline for card issuance varies significantly and is largely influenced by cost-related factors. Typically, financial institutions prefer to wait until they have garnered a substantial number of signups for a particular card before embarking on its production.
Certain businesses might opt for instant issuance through specialised machines that produce cards for individual customers on demand. However, this approach tends to be both costly and challenging to scale, making it a less preferred option for most institutions.
Can cards be personalised with the cardholder's name and other details?
Each card issued carries certain essential information visible on its surface, which typically includes:
- Full card number
- Expiry date
- Customer's name
- CVV/CVC code
- Visa or Mastercard logo
- Customer support number
- BIN sponsor
- Issuance date (though, this isn't always included)
However, with the advent of fintech innovations, displaying some of this information has become more discretionary. For instance, in a bid to enhance security, some institutions like Chase Bank in the UK, omit the card number from the physical card to discourage its use for online transactions.
Some issuers provide only a virtual card number, allowing for re-issuance in case of a security breach without the need for costly physical manufacturing.
How are virtual cards delivered to customers?
Virtual card issuance is a streamlined process that eliminates the need for physical production and delivery. These cards can be generated almost instantly, with details appearing in the user's banking application in a matter of seconds.
How do businesses use card issuance for employee expense management?
Many businesses leverage card issuance as a tool to streamline employee expense management. Often, a card is issued to the employee under the company's name, distinct from a personal card. This card's transactions are tied directly to the company's primary bank account. Transactional limits can be set for each card, providing control over individual spending.
What is the role of card networks (Visa, Mastercard, etc.) in the card issuance process?
The fintech will need a card scheme, which requires working with either Mastercard or Visa as your payment network.
What steps are taken to prevent fraudulent card issuance?
Fraud prevention begins at the earliest stages of the card issuance process. If a company intends to issue a card, it first must confirm the identity of the recipient through a process known as Know Your Customer (KYC).
This involves conducting rigorous background checks to verify the applicant's identity and assess their risk profile.
Are there differences in the card issuance process for credit and debit cards?
While the issuance processes for credit and debit cards have many similarities, a few fundamental differences do exist.
When issuing credit cards, financial institutions assess the creditworthiness of the applicant using risk-based checks, which include credit score evaluation and income verification. Based on this assessment, they set the card's credit limit.
On the other hand, debit cards are linked directly to the holder's account. They don’t require extensive checks as the spending limit is inherently determined by the available funds in the account.
How do card issuance processes differ across different countries or regions?
The core issuance process, typically governed by card schemes like Visa and Mastercard, remains relatively uniform. What changes primarily are the specific procedures and regulations for verifying the identity and eligibility of the cardholder, tailored to the legal and cultural contexts of different regions.
How do mobile wallets and digital payment solutions affect traditional card issuance?
Tokenisation, the technology behind mobile wallets such as Apple Pay and Google Pay, allows users to digitise their physical cards and store them securely on their mobile devices. This advancement not only offers convenience but also enhances the security of transactions.
However, this shift towards digitisation also comes with its set of challenges. For consumers who exclusively rely on their mobile devices for payments, issues like device malfunction, battery failure, or loss of a device could pose difficulties.
What innovations are shaping the future of card issuance?
A wave of technological advancements is shaping the landscape of card issuance. Innovations range from mobile payment solutions like Google Pay to wearable technology that encodes payment details onto devices such as rings. Biometric payment methods are also gaining traction, utilising unique biological features like retinal or fingerprint scans for transaction verification.
Despite this digital shift, physical cards or equivalent alternative methods remain relevant, especially considering a large demographic that still doesn't have access to smartphones. Moreover, fintech firms continue to explore more ways to personalise physical cards, such as customised photos, biometric fingerprints, real-time exchange rate displays, and unique card designs—bearing in mind that these enhancements require card scheme permissions.
Innovations also extend to payment models. For instance, closed-loop networks like WeChat in China bypass traditional card schemes by issuing QR codes to customers for transactions, creating a distinct payment ecosystem. These advancements collectively envision a future of card issuance that's as diverse as it's innovative.