Demystifying Cards
Getting started: The key components of building a card programme
Whether your proposition involves digital banking services, SME lending or point-of-sale financing, there are certain essential components your card programme will need before and after it launches. You’ll need the fundamental building blocks to get up and running but you’ll also need the key components that will support the day to day running of your proposition.
“Our developers looked at Marqeta’s platform and said that’s exactly how they would have built a card issuing and payment processing platform if they were building from the ground up. That’s why we chose to work with Marqeta.”
Daniel Capraro, Co-Founder, CPO – YAPEAL Watch the video
Fundamental building blocks
Essential elements to launch your programme:
Network (Scheme) licence Your programme will need a network (scheme) licence before it can start executing payment transactions using a payment network, either through your own principal membership of Visa or Mastercard or through a BIN Sponsor or programme manager. N.B. we refer to network and scheme throughout this guide. The terms are interchangeable. Generally in Europe we use the term scheme, but globally the norm is to use the term network. Networks (schemes) include Visa, Mastercard, American Express and Discover.
Regulatory licence Enables you to operate in the jurisdictions and countries you want to. Your card proposition dictates what kind of licence you need. Payment services need a payment institution (PI) licence. Payment services and to issue e-money, requires an e-money institution (EMI) licence. Usually to issue cards you (or a partner) will require an e-money licence.
Payment processor A platform, like Marqeta, that connects card programme innovators with card networks (schemes) like Visa and Mastercard. A good payment processor has strong relationships with BIN Sponsors and issuers, and provides the core technologies to enable card issuing and transaction processing.
Card bureau/provider If your programme offers physical cards, it’s up to a card fulfilment bureau to bring the in-the-hand manifestation of your programme to life. Card bureaus handle everything from design to manufacture, personalisation, despatch and delivery to cardholders.
Programme management A provider of a turnkey, end-to-end card programme is referred to as a programme manager. They bring together all of the building blocks described above and provide all essential elements to launch and run a card programme directly. Further information is provided in the licencing section.
Business-as-usual operations
Ongoing elements your programme will need to consider the following:
Marketing Every successful card programme depends on active cardholders. So you may want your programme to attract as many as it can, as soon as it can. This means having a crystal-clear marketing strategy to attract the right people in the demographic you’re targeting. You’ll also need to comply with your card network’s brand requirements – for example, making sure the Visa or Mastercard logo is the right colour and size wherever it appears on your marketing communications. Both networks (schemes) have secured websites containing all these requirements.
Cardholder onboarding Once you’ve enticed people to join your programme, they’ll need to go through an onboarding process. This will include things like know your customer (KYC) checks as part of anti-money laundering (AML) regulations. It’ll also include collecting and validating data from them securely, before deciding what type of products to give them.
Customer service An essential component in building your card programme’s ongoing reputation and brand. Happy customers spend more, talk about and recommend products to others, and are more loyal to a brand, reducing churn and increasing their customer lifetime value (CLTV).
Dispute management Your organisation will need to respond to and manage disputes between customers, acquirers and issuers – by phone, by email, or through a website live-chat function. Every dispute management process is slightly different, so you’ll need to follow your issuer’s specific rules and be mindful that there are also geographical regulatory requirements related to fraud handling. If fraud is suspected, (rather than faulty goods, for example) there is also a reporting requirement.
Fraud management Technically, issuers (the financial institution) are liable for fraudulent transactions, yet have no immediate control (they retain overall control as the regulated entity but this has been delegated day to day to the programme manager) over how cardholders spend, how they’re communicated with, or a programme’s fraud monitoring processes. As such, issuers have their own risk policies and fraud processes you’ll need to comply with, such as monitoring transactions, managing alerts, and acting on any spikes in fraud.
Programme management As mentioned above, a programme manager brings together the building blocks mentioned in the section above. Very often they will also offer operational day to day activities as described. The offering will usually be an off-the-shelf and often inflexible solution that will meet network (scheme) and regulatory requirements but will not allow for a quick, agile iteration process and you will be reliant on the programme manager’s resources and speed to respond plus the associated costs for all operational activities, as well as any changes required as you launch and scale.
