MCI: the common thread behind today’s innovative use cases

They’re among the hottest payments trends of the past 12 months, ushering in society-level transformation at a time of global emergency. Buy now, pay later (BNPL), on-demand delivery and cryptocurrencies have all risen to public prominence, thanks to the way they’ve provided effective financial alternatives to consumers and businesses grappling with the coronavirus pandemic.

Use cases include spreading the cost of payments in uncertain times, delivering dinner to the doorstep amid restrictions on hospitality businesses, and offering high-growth investment assets that can be converted into dollars when needed.

Interestingly, scratch below the surface and you’ll find a common thread linking BNPL, on-demand and crypto. In varying degrees, they all deploy Modern Card Issuing (MCI) platforms to deliver seamless payments experiences. It’s fair to say, in the past 18 months or so, MCI-driven digital commerce, enabled by cloud-based open API platforms, has given us unprecedented convenience and choice when it comes to paying for goods and services, or receiving funds across mainstream and niche sectors.

Alongside pandemic necessity, the growth of these trends has most likely been helped by intuitive mobile app technology. In 2020, a staggering 4.6 billion finance apps were downloaded globally, representing an annual increase of 15%1. Overall, there were 218 billion mobile app downloads last year with users spending on average 4.2 hours per day on their smartphones2, according to mobile data and analytics provider App Annie.

With more people living device-led lives, we can expect that demand for digital-based financial solutions will continue to grow. And at an infrastructure level, Modern Card Issuing is playing an increasingly crucial role in meeting today’s payments needs. Let’s take a closer look at where it fits in with some of today’s big payments trends.

Sometimes dubbed ‘ghost cards’, BNPL solutions now offer single use card options at the point of purchase. For example, with Klarna, during checkout the customer simply selects its One-time card option, chooses the amount of funds they want to borrow and a repayment plan. The card is issued virtually and automatically expires within 24 hours. Any portion of funds unspent following a purchase can be refunded and the final amount owed adjusted accordingly. This method is helping BNPL providers to widen uses for this lending solution in order to accommodate both large purchases and in-store transactions.

When we think of on-demand delivery, many of us picture DoorDash or UberEats. But the model extends beyond takeaways to groceries, laundry services and more. Company-issued cards allow delivery drivers to pay restaurants when they pick up orders. This removes the need for direct integrations with smaller merchants or businesses, speeding up onboarding and supporting growth plans. Spending controls can also be applied to driver-merchant transactions, helping ensure cards are used for their intended purpose.

Using a Modern Card Issuing platform, cryptocurrency exchanges, such as Coinbase, give customers the ability to spend their digital currencies online or in brick and mortar stores and earn crypto rewards. Using just-in-time funding functionality, partners can authorize a transaction and check the equivalent cryptocurrency amount in real time to fund a card purchase in fiat. Partners can also leverage real-time transaction data and webhooks to enable their rewards programs and deliver notifications to users on their crypto earnings.

With such fierce competition in the financial services sector, credit card propositions have to work hard to stand out these days. Modern credit cards that leverage open APIs can offer an end-to-end experience from application, deliver rewards, and allow payments to mobile apps, as part of a drive toward greater alignment with each customer’s own unique interests. This kind of personalization is making financial products more relevant to the end user, which can result in long-term relationships and top-of-wallet status.

Today’s consumers want new products and they want them now. This applies to bank accounts as much as it applies to books or any other retail goods. With a digital-first issuance debit card linked to seamless money movement options, account holders no longer have to wait for a card to arrive in the mail before they can begin accessing their funds. Instead, a card pushed into a digital wallet such as Apple Pay, Google Pay or Samsung Pay as soon as an account is approved gives people near instant spending ability.

The rise of mobile app culture across many areas of our lives has created a permanent need for seamless digital experiences. Modern Card Issuing is a key player in today’s app culture and without it, merchants, financial service providers and consumers would struggle to connect, let alone meet their objectives.

But thanks to open API technology, almost anything is possible with human imagination being the only limit to innovation. Indeed, today’s card program owners have at their fingertips endless possibilities to give their customers customizable, flexible, and secure functionality in real time. It’s the kind of technology that, when combined with the right vision, is capable of powering new payment options which help to enable big financial trends like BNPL, on-demand and cryptocurrency.

Sources:1. Mobile Finance App Report, AppAnnie, Liftoff, 2021

2. The State of Mobile in 2021, AppAnnie, 2021