All You Need to Know About Cards – How cards are issued

Welcome to our new article series, “All You Need to Know About Cards.” In this series, we’ll delve into the realm of payment cards. In this (2/3) article we will explain what is behind the card issuing process and from what components they are made to deliver all the necessary functions. 

What is Card Issuing?

Card issuing refers to the process carried out by financial institutions known as card issuers or issuing banks, where they provide credit and debit cards to individuals or businesses (cardholders). These issuers operate on behalf of major credit card companies like Visa, Mastercard, American Express, Discover, and UnionPay. While some credit card networks directly distribute cards to cardholders, issuing banks typically act as intermediaries, managing cardholder accounts and distributing cards to the account holders.

A direct connection with card schemes such as Mastercard or Visa is necessary to issue cards. However, joining a card scheme can be time-consuming and expensive for businesses and fintech companies. It involves meeting regulatory compliance and reporting requirements. Furthermore, it necessitates an in-depth understanding of the continually evolving processes within the payments industry. Successfully navigating these complexities demands a significant investment of time, resources, and expertise, which can often exceed the expectations of companies seeking to implement card payment programmes.

Who are the suppliers in the card issuing ecosystem?

The card issuing ecosystem involves several key suppliers that play critical roles. Navigating this complex space can be challenging, but each step is essential to ensure a successful card issuing program.

When embarking on the journey of launching your card program, there are several critical components to consider. Firstly, you’ll need to choose your preferred card scheme, such as Visa or Mastercard. Obtaining a Bank Identification Number (BIN) is essential, as it uniquely identifies your institution for payment routing. You have the option to use a BIN sponsor or become a principal issuing member of Visa and Mastercard to obtain dedicated BINs or share BINs.

Once you have the authority to issue Visa or Mastercard cards, the next step is to find a reliable Card Processor. This Processor handles authorisation requests for each card transaction, performing anti-fraud and expiry checks. Integrating your systems with the Processor’s APIs and maintaining card product configurations is essential. However, remember that Processors frequently update their software, requiring constant attention to future integrations and potential downtime.

Additionally, a Payments Clearing Partner is necessary to create e-money accounts and manage balances. Typically, this partner also grants access to payment schemes like SEPA or Faster Payments.

Selecting a Card Manufacturer initiates the chip setup process, which can be lengthy and costly. Once you have your card design and scheme approval, manufacturing begins. However, producing smaller volumes may lead to higher costs, and you’ll need to manage regular management fees. Personalisation and dispatch of cards occur daily when new orders are received, and stock supplies must be continually managed to accommodate growth.

For online credit and debit card transactions, implementing an additional security layer known as 3-D Secure requires finding a suitable provider. Ongoing compliance with regulations and schemes, monitoring transactions for fraud and other risks like money laundering, and managing the KYC (Know Your Customer) process is crucial.

If you wish to integrate your cards with Apple or Google Pay, you must collaborate with tokenization providers and establish individual arrangements with Apple and Google.

Successfully navigating the card issuing ecosystem requires careful coordination with these suppliers, each contributing vital components to ensure a seamless and secure card issuance process.

Of course, there is a lot more to explore about this topic. If you would like to know more about typical business use cases of cards read this article , but if you would like to have a glimpse of how you can issue your own cards read this article. 

In case you have any questions or require guidance on card solutions for your business, don’t hesitate and reach out to us. We’re here to assist you with your card-related inquiries and other fintech-related things.

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