Fintech Q&A: Custom Card Issuance
Cards are the most popular payment method in the U.S., accounting for 57 percent of payments. For fintechs looking to cast a wide net for prospective customers and engage existing ones, cards must be a core offering, as they offer a dependable source of revenue from interchange fees.
In this Q&A with Arroweye Chief Revenue Officer Mica Moseley, he shares the inner workings of card issuance processes so you can make the most of your card program.
Card issuance program — set up
If you’re ready to set up your card issuance program, you may be wondering where to start. Arroweye Solutions, a provider of on-demand, just-in-time payment cards, works with banking as a service (BaaS) provider Treasury Prime to provide physical cards to fintechs through embedded finance solutions.
Card revenue — how do physical cards boost revenue?
Card revenue generally comes from interchange, or the fee merchants pay to process card transactions. Interchange revenue varies by the type of card you’re issuing (debit or credit), the card network (e.g., Visa, Mastercard), the merchant category (e.g., grocery store, furniture retail), and other factors. The cost of card servicing may also vary based on similar factors. In today’s payments landscape, physical cards are still the most versatile and widely accepted form of payment—creating bountiful revenue stream opportunities for fintechs and embedded finance companies that create and execute smart, streamlined card programs.
How long does it take to issue cards?
Speed matters. Customers expect companies to operate in Amazon mode, turning around products and services as fast as possible. A card that’s slow to arrive is a card met with less enthusiasm and has less likelihood of being put to good use right away. You need a partner that can stand your program up quickly—and deliver cards at the pace customers demand.
Setting up a card program
Setting up a card program can take weeks or months, depending on your provider. Arroweye’s personalized setup takes about six weeks. Once you’ve set up an agreement with your partner, you can produce new cards within one to five days and get them into the hands of customers as fast as your mail service of choice can deliver them.
If one to five days sounds like a wide range, that’s because different card production services will work at different speeds. Arroweye’s standard speed, for example, is three days. We also offer faster production options.
Additional factors that can impact the speed of production include certifications from parties like card networks, client approvals for card design and features, and the complexity of your card. For example, cards that just have a magnetic strip can be produced faster but are less secure. EMV cards, or cards that have chips, are more secure and may take slightly longer to produce.
One speed factor is unfortunately not entirely in your control or even the control of your card production partner: mail service. You can select different carriers or pay for faster shipment, but ultimately COVID-19 has resulted in a slower mail stream that should be accounted for in your production timeline.
What does it cost to issue cards?
Several key factors influence card production costs: card features, production speed, and card quantity. But it’s also important to look at the total cost of ownership, including the direct costs that we’ve outlined here, and the ancillary costs that some card producers include, such as storage, inventory management, change management, process/batch fees, and obsolescence. Factors that impact the cost of your card include card complexity (e.g., EMV instead of magnetic stripe, foil, or metallic finishes), how fast you want it issued, and the volume you need.
To get the right price for your needs, start by choosing the right pricing model. Different providers will give you different options. One common option is order-level pricing, where you pay for a large batch of cards at once, then issue cards to customers as they request them. Arroweye offers an annual commitment setup where companies estimate their annual card volume and pay for cards on-demand based on that pricing.
Finally, look for a card production option that provides the right value for your needs, not just the cheapest option. Under-investing can cost you in the long run and can detract from the customer experience and overall viability of your program.
How does the card issuing process work?
The process starts with the card design. If you’re working with Treasury Prime, you’ll design your cards and features with them. They’ll then send that information to a card partner, like Arroweye. Together, we will secure approvals from your partner bank and the card network, and Treasury Prime will work with you if the approving entities come back with change requests for your design.
Once approvals are in place, cards can go into production. At Arroweye, we receive a constant stream of client files for card order requests. Some clients send us multiple files daily, others send them in batches once a day or once every two days. Whatever rhythm the client chooses, once a file lands with us, we start the process of producing the cards, creating supporting documentation that goes with them, then mailing cards and carriers to the end-users.
What should be expected from a card production partner?
Price and quality are important considerations when choosing a card production partner, but you also need to seek out a partner that meets your specific needs. That means they understand your culture and what you’re trying to achieve with your client and associated card program and can check all the boxes that matter to you.
When you’re evaluating card production partners, look for several key qualities: support for the functionalities you need, a “smooth working relationship, and the ability to get cards delivered into your customers’ hands. The whole card issuance and creation process needs to be done right and on time.
You need cards in-market fast and with minimal disruption. How fast can your potential partner stand up a card program? Once your program is up and running, can they issue cards quickly at the pace customers demand? What if you need to make changes? Can they quickly accommodate your needs? Can they react to ever-changing market conditions?
Price is always important in any decision. You don’t want to go with the cheapest option simply because it’s the least expensive. That can cost you in the long run. Seek out the right pricing model and evaluate whether the provider offers fees that make sense for the value they are providing you.
Finally, look at a potential partner’s track record. Do they have a history of long-standing partnerships in your current area of need? Does their suite of services provide the value you need to create longstanding customers?
Treasury Prime manages the disparate parts of the card issuing process for its fintechs and embedded finance partners. That means you only have to deal with one point of contact, freeing up your staff to handle other aspects of your business.