Thanks to the API-first approach of modern card issuing, credit card issuers are enjoying an era of unprecedented control. These controls can include things such as data from credit card transactions, how rewards programs are structured, the configuration of annual percentage rates (APRs), and the ability to acquire and retain cardholders.
This increased control is due to the rise of APIs as a critical technology component for information sharing and innovation. According to the 2022 State of the API Report, Postman reported that its user base collectively made over 1.1 billion API requests, approximately doubling the number from the 2020 report. The U.S. leads the way with over 193 million API requests.
API basics
An API is like a translator that allows two applications to communicate with each other. Without the need for users to get involved, APIs provide a secure and standardized framework for applications to team up and deliver requested information.
Prior to the advent of APIs, business-as-usual in the credit card space was full of roadblocks and frustrations, as legacy platforms fell short. Through APIs, modern credit card issuing has helped give control back to the issuer. Post-launch, issuers were forced to rely on their mainframe provider’s fragmented and incomplete data and reporting. Even worse, as consumers demanded real-time access to financial information presented in a way that helps them make healthy financial decisions, issuers were saddled with parsing data from multiple different systems and formats, often putting their customer relationships at risk.
A modern credit platform with an API-first approach puts great control in the hands of issuers. APIs make it easy to launch highly customized credit card products with flexible rewards programs, access to deep insights across the user lifecycle in real time, and the ability to freely iterate and experiment at a rapid pace.
Why control matters
Control means different things to different businesses. Some grasp the opportunities presented by harnessing the power of data in real-time, which is made vastly simpler by a modern credit platform. Others find dynamic spend controls compelling because they enable issuers to apply spend controls to card products in the form of authorization controls and velocity controls. Still others gravitate toward the ability to personalize rewards programs as a persuasive way to honor cardholders as individuals, all the while building bonds that support customer acquisition and retention strategies.
- Advanced data analytics – A modern credit platform with an API-first approach makes it simple for issuers to gain deep insights into cardholder purchase patterns, needs and behaviors. Every transaction provides rich information on the who, what, when and where of cardholder behavior. By slicing and dicing the data, marketers can understand customer needs across geographies, income, age, and other attributes. Harnessing that data can enable issuers to effectively target customers whose needs are not met through current offers. Further, analyzing data from similar customer segments and stitching it with account related data can be useful in devising personalized rewards and offer strategies.
- Dynamic spend controls – With an API-first approach, modern credit platforms give issuers control to set business rules and enforce policies around spending. Issuers can limit when and where a card can be used, and restrict cards to a set number of transactions or amount of spend over a defined period of time to prevent misuse. Authorization controls limit the merchants and merchant categories with whom a user can transact. Velocity controls limit maximum amounts, frequency of transactions, and vendor categories. The dynamic nature of these spend controls means that issuers can make changes to create new experiences as needed.
- Personalized rewards – When given control, issuers can maximize the benefits of using credit card rewards to keep and grow a vibrant cardholder base. According to Marqeta’s 2022 State of Credit report, 38% of survey respondents listed rewards as a key appeal of credit cards, second only to convenience. Even so, just 26% of U.S. respondents said their rewards were very personalized to their spending habits. With advanced data analytics as described above, issuers can build personalized credit card rewards offerings based on a cardholder’s transaction data, and make real-time changes when spending behaviors shift.
Greater control can boost profitability
The controls made possible by a modern credit platform can unlock the value of customer engagement, which ultimately can boost profitability. Access to data makes it easier to bring truly unique and differentiated credit card products to market. When users feel their card issuer really knows them as individuals, trust and loyalty blossom, and the card moves to top-of-wallet. Marqeta’s 2022 State of Credit report found that 87% of consumers surveyed have one credit card they use more than any other.
And that’s just the tip of the iceberg. Increased engagement makes it more likely cardholders will turn to the issuer for other products and services. with other products and services. Marqeta’s survey found that 58% of respondents reported having other financial products with their main credit card provider. The deeper relationships that result increase usage and reduce churn, which again boost program profitability.
All of this is made possible by greater issuer control, which in turn is made possible by the API-first approach of a modern credit platform.
