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6 Reasons Cards Issuers Need Modern API-based Platform

Jul 13, 2022

Payment cards are a necessity today. The benefits they deliver are immense not just to consumers. But also to issuers such as banks, NBFCs, and businesses.

To businesses and financial institutions, cards are deal-breakers. Accessible in physical and virtual form factors, they hold the power to drive customer loyalty, enhance experiences, control business spending, and generate revenue. That’s why despite competition from other digital payment modes, card transactions are projected to grow at 12.9% reaching $39.7 trillion by 2025.

Shortcomings of Legacy Card Issuance Platforms

Conventionally cards were designed and issued using legacy platforms. Though it simplified card issuance to a certain extent, the rigid APIs had limited scope for innovation, speed, and multiple use-case support. Configuration flexibility, customizations, and security compliance also took a hit. This resulted in slow go-to-market speed, complex configurations, compliance, tokenization issues, and fragmented reporting. In short, legacy infrastructure left no potential to cater to modern customers with evolving needs and priorities.

Why API-based Card Issuance is the Way to Go

In an era where speed of card issuance, ease of onboarding, personalization, security, and tangible reward redemption are key differentiators, modern card issuance is the need of the hour. Right from launching a card program, to managing the program lifecycle, meeting regulatory compliance, to scaling the card program, modern API-based card issuance is the way to go.

Card issuers worldwide are choosing modern card issuance over legacy for the following reasons.

1 Versatile Personalization

A recent McKinsey report suggests that businesses can achieve a 15% revenue growth through personalization. Modern card platforms have flexible APIs that are amenable to innovation and customization, making them best suited to cater to modern consumer needs. The card can be customized for integration into a digital wallet for payments across in-store and online POS, and ATMs with varied limit management options for cardholders.

The versatility of modern cards is so enormous that they can support multiple use cases on the go. They can double as general-purpose prepaid cards, single-use, and multi-purpose travel cards, gift cards, subscription cards, loyalty cards, and transit cards, among many others.

2 Agile Wallet Integrations and Tokenization

Cards can offer the advantage of physical as well as virtual form factors to issuers and customers. Though physical cards may take time to be shipped, virtual cards can be activated and used instantly, thus establishing consumer engagement right from day one.

Modern card issuance platforms enable you to scale up and integrate virtual cards and physical cards into digital wallets. They lower development efforts by replacing numeric codes with natural language labels and creating actionable data. They also facilitate encrypted and tokenized virtual card data that can ease the integration of cards.

3 Access to PCI Widgets

The PCI Security Standards Council provides a Payment Card Industry Data Security Standard (PCI DSS) framework to protect card transactions and card holders’ data from breaches. PCI DSS certification is mandatory for fintechs or any company accepting card payments, storing, and displaying consumer card data on their website & apps. The compliance process is cumbersome and time-consuming for issuers and merchants who want to manage card payments.

Modern card issuance platforms provide access to PCI widgets that enable instant PIN activation and access to mobile apps without the hassle of going through a lengthy compliance process. This enables issuers to focus on their core business and customer experiences while leaving issuance, compliance, data security, privacy, and program management to certified modern issuance platforms.

4 Dynamic Authorization

In legacy infrastructure, spend controls are mostly preset and are not dynamically validated against live data and changing business rules. But modern card issuance opens up the payment flow and authorizes card transactions against live criteria such as card-present and Card Not Present (CNP) scenarios, spend amount, time, date, and frequency of transactions. It also customizes card spending authorization based on customer risk profile, merchant listing, currencies, and geolocation.

5 Profitability

Building a card program from scratch requires resources in terms of capital and time. Even though card issuers identify a problem they wish to address, the time and cost required to test the hypothesis are not feasible or profitable.

Modern card issuance enables issuers to run and manage card programs while reducing cost of ownership and accelerating profitability through increased customer acquisition, retention, and satisfaction. The card program managers do not have to do the heavy lifting in obtaining the regulatory and compliance standards. With the help of modern card issuance, they can earn revenue through interchange charges and Merchant Discount Rate (MDR) by addressing the identified segment from the start. The margins can be shared between card issuers, card program managers, card networks, and processors.

6 Global Scale-ups

Modern card infrastructure can help scale up businesses for global payments and expansion. Leveraging their region-agnostic cloud infrastructure and scalable resources, issuers can automatically scale as and when traffic and transaction volume grows, without any manual intervention.

Card issuers get the option to expand and test new business models and card use cases while launching card programs with the help of API-based card issuance stacks. This saves time spent on launching a new program by integrating with existing infrastructure and databases seamlessly. Equipped with backups and disaster recovery, these systems can be compatible with multi-currency payments, thus making them an ideal choice for expense management and travel payments management.

Now remember, the six reasons delved upon above are just the beginning.

Want to know more about how modern card issuance can benefit your business?

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