What is Card Issuance and How Does It Work?

The world is highly modernized, and 75% of all payments worldwide are made digitally, using banking cards mostly. In that regard, businesses strive to take advantage of card issuance in order to improve the services they provide. 

In this post, you’ll discover what card issuing is, what businesses use this opportunity,how the process of card issuance works, and what card issuers are. Besides, you’ll review the top 5 card issuance platforms. 

What Is Card Issuing?

Card issuing is the process by which a financial institution or authorized entity provides payment cards, such as credit, debit, or prepaid cards, to consumers or businesses.

Card issuing enables cardholders to access funds, make purchases, and manage their finances through various banking and payment systems. They also can provide access to additional functionalities that are provided by businesses to their customers through personal cards belonging to a closed environment, meaning only businesses providing such cards accept them from customers. 

Why Your Business Needs Card Issuing

Businesses from across various industries, as detailed previously, have incorporated branded cards. Here are the reasons why it’s a value-adding intervention for companies:

• Enhanced customer experience: Offering branded cards may enhance your customers’ overall experience by giving them a quick and secure method to make payments and manage their accounts.
• Brand loyalty: Custom-branded cards may increase client loyalty and drive repeat business by associating the card’s convenience and perks with your brand.
• Market differentiation: Providing distinctive card items will help your company stand out from the competition and attract new clients.
• Data insights: Card transactions give significant information about consumer spending patterns, preferences, and behavior, which may be used to improve corporate plans and marketing campaigns. You may even explore employing AI technology to make better use of the huge data you’ll be acquiring.
• Global expansion: For firms that operate globally, offering forex or multi-currency cards may make transactions simpler and more cost-effective for consumers traveling or doing business overseas.

As you can observe, the main idea here is to offer your buyers a better customer experience, make them more likely to be your recurring customers, incentivize them to purchase more, and set your company apart from the competition. 

Types of Cards Used in Banking System

Let’s proceed with briefly reviewing common types of cards used in banking systems. You, as a business, can provide customers with these cards with the help of a card issuance provider. The list of options here includes the following card types:

• Debit card

A card linked directly to a customer’s bank account allowing them to spend money by drawing on funds they already have.

What debit card is used for: Making purchases, withdrawing cash from ATMs, and online transactions.

• Credit card

A card that allows customers to borrow funds up to a certain limit to make purchases or withdraw cash.

What credit card is used for: Purchasing goods and services, cash advances, and building credit history.

• Forex card

A prepaid card that can be loaded with foreign currency at a fixed rate.

What Forex card is used for: Convenient and cost-effective way to carry and spend money abroad.

• Business card

A card issued to employees or executives for business-related expenses, often with features tailored to corporate needs.

What business card is used for: Managing company expenses, tracking spending, and earning rewards on business purchases.

• Prepaid card

A card preloaded with a certain amount of money that can be used for transactions until the balance is depleted.

What prepaid card is used for: Budgeting, gifting, and as an alternative to bank accounts for those without access.

• Virtual card

A digital version of a physical card typically used for online transactions or for paying with the help of the Tap to Pay function.

What virtual card is used for: Secure online shopping, reducing the risk of fraud.

You can discover how the Tap to Pay function works from another blog post by DashDevs. 

• Store card

A card issued by a retail store, often offering benefits and discounts at that specific retailer.

What it is used for: Loyalty rewards, special financing, and promotions at the issuing store.

Two of the most popular card types that businesses offer their customers are virtual cards and store cards, which are perfect fits for spending money within a closed business environment and collecting bonuses, respectively. 

You may be interested in developing a fintech app, through which you will be able to providing your customers with cards of your choosing.

What Card Issuing Process Is

Let’s review the card issuing process in detail on the example of a Mastercard network paired with an abstract issuing institution. As you can observe from the infographics, there are three participating parties:

• Cardholder: An individual or entity to whom a payment card is issued.
• Issuing institution: The licensed bank or any other financial organization that provides the card. Alternatively, a fintech institution such as a neobank, which doesn’t have a banking license but cooperates with actual banking institutions through banking API. 
• Issuing platform: The technology organization that creates and manages cards and accounts behind them. 

Most of the card issuing process is handled on the issuing platform’s site, with the issuing institution only serving as an intermediary between the cardholder and the issuing platform. 

You can discover the comprehensive details about banking APIs and how they work from another blog post by DashDevs. 

Here’s how the complete card issuance process works step-by-step:

1. Application: The individual or entity applies for a card by submitting personal and financial information to the issuing institution.
2. Verification: The issuing institution verifies the applicant’s information, including identity, credit history, and financial stability.
3. Approval: If the applicant meets the criteria, such as age, citizenship, etc., the issuing institution approves the application, moving it forward to the issuing platform for actual car issuing.
4. Account creation: An account is created for the cardholder by the issuing platform, and the card is linked to this account.
5. Card personalization: The card is personalized with the cardholder’s name, account number, and other relevant details.
6. Distribution: The card is delivered to the cardholder, either through mail or by picking it up at a branch of the issuing institution.
7. Activation: The cardholder activates the card, often by calling a phone number or using an online platform provided by the issuer.

In the end, a cardholder has a banking account and a card, whether it’s credit or debit, virtual or physical, managed by an issuing institution and empowered to conduct financial operations with by the issuing platform. 

Pro note: Businesses looking to adopt card-issuing functionality must integrate a banking API in a digital solution through which they intend to issue cards to their customers.

You can discover the comprehensive details about banking APIs and how they work from another blog post by DashDevs. 

Here’s how the API integration process looks like step by step:

1. API Selection: The developer selects the appropriate banking API that fits the application’s requirements.
2. Authentication: The developer obtains access credentials (such as API keys or tokens) from the bank or financial institution to authenticate and establish a secure connection with the API.
3. Integration: The developer integrates the API into the application’s codebase, using the provided endpoints to interact with the bank’s services.
4. Testing: The developer tests the API integration in a sandbox or development environment to ensure that the application can successfully communicate with the bank’s systems and that the desired functionality works correctly.
5. Deployment: Once testing is complete and the integration is verified to be working as expected, the application is deployed to production, allowing end-users to access the banking services through the integrated API.

Establishing a card-issuing process for a digital application requires substantial experience and expertise with fintech software development and card-issuing services. So, should you need such an intervention, don’t hesitate to reach out to a trusted fintech development firm. 

What Is a Credit Card Issuer?

A credit card issuer is a financial institution or entity that provides credit cards to consumers or businesses.

Basically,the credit card issuer extends a line of credit to cardholders, allowing them to borrow funds up to a certain limit for purchases, cash advances, or balance transfers.

For businesses, the involvement of a credit card issuer as a third party and offering customers credit as they intend to purchase goods from the business is the way to maximize the number of closed deals. 

As an additional benefit, it makes it unnecessary for the customer to apply for credit from a standalone banking institution. Not to mention that in the case of offering credit services directly during the checkout process, businesses can negotiate better terms of credit for their customers from the credit card issuer. 

The Role of Card Issuer

Let’s summarize all the procedures that a card issuer platform conducts to enable card issuing and management for individuals and businesses:

• Issuance of payment cards: Providing customers with credit, debit, or prepaid cards for making transactions.
• Transaction approvals: Authorizing or denying transactions depending on the cardholder’s account status and available money or credit.
• Billing and statements: Creating statements that describe transactions, fees, and outstanding amounts for cards.
• Interest and fees management: calculating and applying interest charges on outstanding balances, as well as handling other card-related costs.
• Risk management: Assessing and managing the risks connected with card issuance, such as credit risk and operational risk.
• Fraud detection: Implementation of systems and procedures to identify and prevent fraudulent transactions on cardholder accounts.
• Rewards and loyalty programs: Offering incentives such as cashback, points, or miles to promote card use and loyalty.
• Customer support: Assisting cardholders with queries, complaints, and difficulties about their accounts and transactions.
• Card renewals and upgrades: Managing the process of renewing expired cards and providing card upgrades depending on the cardholder’s eligibility.
• Regulatory compliance: Ensuring that all card issuance and management processes adhere to applicable laws and regulations.
• Partnerships with businesses: Working with retailers, payment networks, and other businesses to increase card acceptance and provide extra advantages to cardholders.

So, car issuing platform services providers can be treated like technology companies providing payment infrastructure and handling card issuing and account management processes backend. 

Top 5 Popular Card Issuance Platforms

Pro note: Visa and Mastercards global card issuing networks do not issue cards to non-banking businesses and individuals. Typically, they partner with financial institutions, empowering them to issue cards operating within Visa or MasterCard networks respectively. 

In that regard, it’s essential to know what companies can offer businesses partnerships and the integration of card-issuing functionality into digital products and solutions. Which will enable, for example, issuing discount cards, store cards, virtual cards for closed digital ecosystems, and more:

#1 Marqeta

Marqeta, founded in 2010, is a leading global modern card issuing platform that provides innovative payment solutions for businesses and financial institutions. It has revolutionized the card issuing industry by offering a highly customizable and flexible platform that caters to the unique needs of its clients.

Card issuing services by Marqeta:

• Virtual cards
• Physical cards
• Tokenization
• Core banking services API

Regions covered: Global, with a strong presence in North America, Europe, and Asia-Pacific.

Additional information about Marqeta Inc. is available from this blog post by DashDevs. 

#2 Galileo Financial Technologies

Established in 2000, Galileo Financial Technologies is a prominent platform known for its robust API-based payment processing and credit card issuing capabilities. It provides a comprehensive suite of financial services that enable businesses to launch innovative payment solutions.

Card issuing services by Galileo Financial Technologies:

• Credit and debit cards
• Prepaid cards
• Financial technologies API

Regions covered: Primarily North America, but also expanding to Latin America and Europe.

#3 I2c INC.

Founded in 2001, i2c Inc. is a global provider of payment and open banking technology that offers a flexible and scalable card issuing platform. It supports a wide range of card programs and is known for its ability to deliver customized payment solutions.

Card issuing services by I2c INC:

• Credit, debit, and prepaid virtual card programs
• Loyalty programs
• Multi-currency support
• Card issuing API

Regions covered: Global, with a significant presence in North America, Europe, the Middle East, and Asia-Pacific.

#4 Thredd 

Thredd is a relatively newer player in the card issuing space, known for its innovative and user-friendly platform. It aims to simplify the card issuance process for businesses and provide a seamless integration experience.

Card issuing services by Thredd:

• Virtual and physical card issuance
• Card issuance API
• Quick integration

Regions covered: Primarily focused on North America and Europe.

#5 Stripe

Founded in 2010, Stripe is a leading technology company that offers a wide range of payment processing and financial infrastructure services, including card issuing solution. It is renowned for its simplicity, reliability, and scalability, serving businesses of all sizes.

Card issuing services by Stripe:

• Physical and virtual cards
• Banking API with the support of card issuance

Regions covered: Global, with a strong presence in North America, Europe, Asia-Pacific, and Latin America.

It’s worth mentioning that fees and costs in all the listed and potentially most other providers of card issuing are typically flexible and vary based on particular agreements with businesses, the volume of cards, location and citizenship of card holders, card types, etc. 

Final Take

Card issuing is a valuable opportunity for businesses across various industries to enhance customer experience, increase revenue, and strengthen brand loyalty. By understanding the process of card issuance and selecting the right platform, businesses can offer convenient and secure payment solutions to their customers. Platforms like Marqeta, Galileo Financial Technologies, i2c Inc., Thredd, and Stripe provide flexible and innovative card issuing services to meet the diverse needs of businesses and their customers.

To start providing card issuance services as a non-banking business, you need a banking API integration. The right call for many companies is to collaborate with a trusted provider of fintech development provider and let them handle the technical aspects of integration. Let DashDevs, a development firm with over 12 years of experience, contribute to your best project.

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