Selecting the right issuing processor for an own card program

In recent years, it is increasingly common for non-banking companies to consider launching their own payments cards. In order to bring a successful product to the market, choosing the right issuing processor is crucial. To find out more about the process and its intricacies, we spoke with Paul Schreuders from PaymentGenes.

Launching a credit, debit, or prepaid card program can help companies boost their value proposition. It can help build a competitive advantage, boost customer loyalty and retention, increase revenue, and generate valuable transaction data.

“As one example, some of that customer loyalty and retention can come from rewards programs, cash-back offers, or other incentives that encourage people to use the card,” said Paul Schreuders, practice lead Issuing at PaymentGenes.

The trend of offering an own card program is particularly visible in the financial services industry, with the likes of alternative lenders, neo-brokers, digital banks and fintechs all joining traditional incumbents (banks) in offering such programs.

“In today's highly competitive financial industry, offering payment cards such as credit, debit, or prepaid has become a necessity for different types of businesses that are looking to expand their financial services portfolio and increase revenue or loyalty with their customers,” said Schreuders.

Yet the trend is extending to other sectors as well, mainly those who deal with high-volume B2B transactions in verticals such as mobility, employee benefits, financial management tools, and more. “We are seeing a large uptake in companies that are adding card-issuing capabilities to cater to objectives in areas such as expense management, employee benefits, mobility, and gift cards.”

The issuing processor

In order to launch an own card program, choosing the right issuing processor is key for success. “Issuing processors are the entities that enable payment and electronic money-issuing services to other businesses. They are also responsible for actually issuing the cards,” explained Schreuders.

Issuing processors usually hold an Electronic Money Institution (EMI) license from a national regulator or partner with a BIN sponsor who holds such a license. Within the past five years, the number of EMIs in the European Union and the United Kingdom increased by around 44%.

The issuing processor has a few key responsibilities, including authorization, clearing & settlement of transactions, fraud management, and holding a ledger with the records of past transactions made.

Prior to engaging with a card issuing provider, several factors need to be taken into consideration. For example, a business should have a very clear idea of the goals of the card program, the value proposition, the budget, and the regulatory requirements that must be followed.

There are, of course, different types of issuing processors that offer differing services – and at different pricing. But choosing the right option will need to take into consideration a range of factors, not just price.

“It is crucial to choose a partner that has the right capabilities for a card program, that has a strong track record and preferably one that can offer case studies or references in similar or related industries,” noted Schreuders.

Some of the largest payments processors in Europe include companies like WorldPay, Nexi Payments, or Adyen. Together, these companies processed over one billion transactions made in 2022 with Visa and Mastercard (including Maestro) credit, debit, and prepaid card.

Next to the more traditional players, many new innovative and specialist providers have emerged over the past years like Enfuce, Swan, Thredd or Marqeta.