How to launch an issuing product and issue credit cards

An issuing product allows businesses to create and roll out their own card products (e.g., debit and credit cards) that fit their brands and meet their customers’ needs. Businesses that issue their own cards can create a new revenue stream and add unique features, such as custom rewards programmes and spending controls, for a better user experience and brand integration. The issuing product is also a powerful tool for companies that want to improve customer engagement and payment options without relying on traditional banks.

Demand is increasing for card issuing services, and the global card issuing platforms market is expected to grow from $1.2 billion in transaction value in 2024 to $2.8 billion in 2029. Below, we’ll explain what businesses need to know about launching their own issuing products, including what types of products are available, how they’re typically used by different kinds of businesses, and the benefits and challenges involved.

What’s in this article?

Key players involved in card programmes
Types of issuing products
Types of businesses that launch issuing products
Benefits of launching an issuing product
Challenges of launching an issuing product
How to launch an issuing product

Key players involved in card programmes

Here are the key players involved in payment card programmes.

Issuers

The issuer is the financial institution providing the payment card. It’s responsible for extending credit for credit cards, handling deposits for debit cards, and setting terms and conditions including fees, interest rates, and credit limits. It’s also responsible for ensuring regulatory compliance, approving transactions, managing customer accounts, and handling the underwriting process. Examples include major banks like Chase or Bank of America as well as fintechs with card services.

Acquirers

Acquirers are financial institutions that process credit and debit card transactions on behalf of businesses. They’re also known as merchant acquirers or acquiring banks. Acquirers facilitate card acceptance, authorise transactions, settle transaction funds, and ensure businesses receive payment for card purchases. Examples include companies like Worldpay or First Data.

Payment networks

Payment networks facilitate electronic payments by connecting issuers and acquirers and authorizing and settling payment transactions. They’re responsible for setting interchange fees, establishing rules and standards for transaction processing, and ensuring secure, efficient payment operations across the network. Examples include card networks like Visa, Mastercard, American Express, and Discover as well as electronic funds transfer systems.

Payment processors

Payment processors manage the technical aspects of accepting and processing card transactions for businesses. They capture and transmit card transaction details from businesses to acquirers and payment networks for authorisation and settlement. Examples include companies like Stripe, which processes payments and handles various aspects of transaction management.

Types of issuing products

For businesses that want to launch issuing products, it’s important to consider what card type would best suit their customers’ needs. Here are some of the different types of issuing products they can consider.

Credit cards

Credit cards allow cardholders to borrow up to a pre-set credit limit, carry a balance month to month, and make minimum payments while paying interest on the balance.

Types

Rewards cards: These offer points, miles, or cash back on purchases.
Travel cards: These target frequent travellers and often offer travel-related benefits.
Cashback cards: These provide a percentage of cashback on spending.
Balance transfer cards: These have a low or 0% introductory annual percentage rate (APR) for balance transfers.
Secured cards: Designed for those with limited credit histories, these cards require a security deposit.
Store cards: These offer discounts or rewards with a specific retailer.

Debit cards

With debit cards, customers can spend directly from the balance of their linked current account.

Types

Traditional debit cards: These are basic cards with standard features.
Pre-paid debit cards: Users can load these cards with a specific money amount and use them like normal debit cards.
Virtual debit cards: These are digital cards used for online purchases.

Pre-paid cards

Pre-paid cards function like debit cards but are pre-loaded with funds rather than linked to a bank account.

Types

Gift cards: Users can load these cards with a specific amount and gift them to others.
Payroll cards: Employers use these cards to pay employees, especially those without bank accounts.
Travel cards: These come pre-loaded with foreign currency. Cardholders typically use them for travel expenses.
General purpose reloadable cards: Users can reload these cards with funds and use them for multiple purposes.

Charge cards

Charge cards have no pre-set spending limit, but users must pay the balance in full each month.

Types

Business charge cards: Designed with business expenses in mind, these cards often offer additional benefits.
Premium charge cards: These have exclusive benefits and perks and higher annual fees.

Virtual cards

Virtual cards are digital-only cards used for online or mobile payments.

Types

Single-use virtual cards: Users generate these cards for a single transaction, making them a more secure option.
Subscription management virtual cards: These help manage recurring payments and make it easier to cancel subscriptions.
Employee expense virtual cards: Employees receive these cards for business expenses, making it easier for the business to track their spending.

Types of businesses that launch issuing products

A range of businesses typically launch issuing products. Here’s a closer look at some.

Traditional financial institutions

Banks: Retail banks, commercial banks, and credit unions are the most common issuers of credit and debit cards. They have the infrastructure, customer base, and experience with regulatory compliance necessary to manage card programmes.
Credit card companies: Companies like American Express and Discover specialise in issuing credit cards. They offer a variety of card products for customers and businesses.

Fintechs

Neobanks: Digital-only banks provide banking services, including debit and pre-paid cards. They often target specific demographics or come with innovative features.
Payment companies: Some payment companies like Stripe issue virtual or physical cards for online and in-store purchases.
Lending platforms: Some peer-to-peer lending platforms or online lenders issue credit lines or credit cards.
Buy now, pay later (BNPL) providers: Some BNPL companies offer instalment payment options using virtual or physical cards.

Retailers and brands

Retailers: Numerous large retail chains issue store-branded credit cards with exclusive benefits to encourage customer loyalty.
Brands: Companies with strong brand recognition can partner with issuers on co-branded credit cards.

Other businesses

Airlines and travel companies: Some airlines and travel companies have co-branded credit cards with travel rewards and benefits for frequent travellers.
Technology companies: Several tech companies also issue virtual or physical cards for specific use cases such as expense management and subscription services.
Gig economy platforms: Some platforms for gig workers offer prepaid or debit cards for easier payments and managing expenses.

Benefits of launching an issuing product

Launching an issuing product can yield numerous benefits. Here are some of the potential advantages.

Better customer connections

Top-of-wallet presence: By issuing their own cards, businesses can keep their brands front and centre in customers’ minds every time they make a purchase. This consistent visibility can promote deeper customer relationships and encourage repeat business.
Data-driven insight: Using transaction data from their issued cards, businesses can better understand customer behaviour, preferences, and spending patterns. These analytics can inform marketing efforts and personalised offers and can increase customer satisfaction.

New revenue streams and lower costs

Interchange fees: Businesses earn a percentage of the transaction value as interchange fees every time a customer uses their cards. This can be a substantial source of revenue, especially as the cardholder base expands.
Interest income: Issuing credit cards can earn businesses interest income on outstanding balances.
Reduced processing costs: Businesses might be able to negotiate better processing rates and fee structures by issuing their own cards. This can lead to major savings over time.

Greater flexibility and control

Product customisation: Businesses have full control over the design, features, and benefits of their card programmes. They can create products that perfectly align with their brands and target audiences.
Customer experience: From application to onboarding and ongoing support, businesses can define the entire customer card journey.
Improvement opportunities: Businesses can experiment with technologies and features such as contactless payments, digital wallets, and real-time rewards.

Competitive advantage

Differentiation: A unique, compelling card programme can help businesses distinguish themselves from competitors. This can attract new customers who value the programme’s specific benefits and rewards.
Market expansion: Businesses can design their card programs to meet specific customer needs and preferences to reach new markets or demographics.

Strategic partnerships and ecosystem development

Co-branding opportunities: Businesses can partner with another brand or company to create mutually beneficial co-branded cards that enable both entities to expand into new customer segments.
Value-added services: Businesses can integrate their card programmes with other products or services to enhance customer value and drive engagement.

Challenges of launching an issuing product

Launching an issuing product presents some challenges. Here are some possible obstacles.

Payment network integration: Businesses must integrate their products with established payment networks such as Visa, Mastercard, and American Express. They must adhere to strict technical standards, undergo rigorous testing phases, and potentially navigate time-consuming, costly certification processes.
Fraud protection customisation: To launch a card programme, the business needs to invest in fraud prevention systems that suit its specific type of card programme and its risk profile. For instance, a corporate card might require different controls and monitoring compared to a customer debit card.
Credit risk in new markets: Businesses targeting underserved or unbanked populations without much traditional credit history must develop alternative scoring models based on other data points. This requires sophisticated analytics capabilities, which can be difficult to build and maintain.
Regulatory approval: To be successful, businesses need to constantly keep up with changing regulations across multiple jurisdictions. They must adapt as laws governing consumer protection, data privacy, and cross-border transactions shift and change.
Customer support infrastructure: Providing consistent, reliable customer support is imperative as increased card use can result in higher volumes of inquiries and transactions. Businesses must develop infrastructure that can expand while maintaining high service standards.
User experience: Businesses should design a card product that meets both regulatory and security standards and delivers a superior user experience. They must balance incorporating features such as mobile integration, real-time notifications, and loading options with ensuring simplicity and ease of use.
Cost management: With any card product, businesses must strike a balance between managing costs, maintaining profitability, and offering competitive pricing and benefits to customers. They must decide how much to invest in technology, security, and customer acquisition while keeping the product financially viable.
Branding relationships: If the card product is part of a co-branding initiative, it needs to align with both brands’ identities and expectations. They must negotiate agreeable terms, synchronise marketing campaigns, and use consistent branding.
Technological upkeep: Businesses must keep the product technologically up-to-date and secure against the latest threats while continuing to innovate. This necessitates ongoing effort and investment.
Global transactions: Businesses that manage transactions across a variety of currencies and regulatory environments must meet requirements while operating transparently and offering competitive rates to customers.