5 Things to Consider When Selecting an Issuer Processor

Selecting an issuer processor can be tough if you don’t know where to start, but it’s perhaps one of the biggest technical decisions that a fintech will need to make. There are plenty of different options available but finding an issuer processor with the right capabilities and supportive attitude can be pivotal to a fintech’s success. 

Why is selecting the right issuer processor so important?

Let’s quickly recap what an issuer processor does.

An issuer processor is the connector between all the moving parts of your payment solution, so choosing the right one is crucial.

In simple terms, an issuer processor connects an issuer – typically a bank, fintech, or payment firm – directly with networks, and provides record systems, manages the issuance of cards, authorises transactions, and communicates with settlement entities.

This role vital in ensuring that your offering works effectively for your customers. You must have absolute faith in the provider you have selected to give your programme the best chance of success.

5 things to consider when choosing an issuer processor

Our VP of Sales in North America, Blake McCelland is regularly asked for his view on what makes one issuer processor stand out over the others.

Here we share Blake’s five key criteria to consider when selecting the right issuer processor for your fintech business.

1. What regional processing coverage do you need?

When evaluating issuer processors, ask yourself, do they process for the regions I’m targeting?

During your initial development stage, you may be only planning to operate within a certain number of territories; however, try to keep your long-term vision in mind. Look ahead to your future growth path and choose a processor that can be with you on a global journey.

It’s important to keep in mind here that although your customers can use their card in any country they want (so long as the currency is accepted through Visa and Mastercard), if you want to issue a card to someone in, for example, the United States with a US BIN type, then you’ll need to work with a company with a US licence that can process those transactions. It all comes down to where the physical card or virtual card would be issued and where the licence is held, rather than where the money is spent.

This means that it isn’t as simple as you might think to start processing in a new country or region.

Each country has different rules for processing transactions, so you can’t just duplicate your card launch in new countries as they may not be able to process the transaction in the same way.

When looking for a processor, it’s also beneficial to research ones that have experience moving into new regions with their existing clients.  

Further down the line, when your fintech reaches the point where scaling into new territories makes sense for you, you want to have full confidence that your processing partner could ease your expansion process and costs, rather than having to find a new processing partner for each new country.

We would advise you to carefully consider what areas you would like to operate in now and in the future, and then select a processor that can service your needs across multiple regions.

2. Which tech stack does it use?

Make sure the processor you choose operates an advanced technical solution that uses forward thinking technology, such as JSON APIs or cloud technology.

You may be thinking, why is the tech stack they’re using so important if it is behind the scenes?

Technology is a big part of how powerful and adaptable your processor will be for your program. It is crucial that you are confident in the stability of the platform and its ability to scale with you as you grow. The right tech stack will support your needs, especially as your proposition develops.

When making the decision of which issuer processor to go with, consider what type of APIs and messaging format they are using.

Carta Worldwide is a modern issuer processor, meaning that we use JSON APIs.

You should already have heard of SOAP APIs as these have been around for a while, but you are probably wondering what the difference is between SOAP and JSON.

A SOAP API is a messaging protocol specification for exchanging structured information of web services in computer networks.

However, a JSON API (also known as a JavaScript Object Notation API) is an Application Programme Interface (API) designed for lightweight data interchange between two computer applications on the same device or between different computers in different geographical areas.

A benefit of using JSON APIs is that it is easy to integrate with other systems. But most importantly, it is easy for humans to understand. That means it is well-suited for the evolving fintech space, where software needs to be utilised quickly and frictionlessly to future-proof your product. 

It’s important to consider that many processors still aren’t working with JSON APIs yet and only use ISO 8583, a widely known format for financial messages from the card networks. These messages are created using complex data fields which is difficult for developers to use.

As a modern issuer processing platform, Carta Worldwide can convert the archaic ISO scheme messages into light and simple JSON messaging for fintech platforms to easily interpret. Carta translates the data from one messaging form factor to another and helps to bridge the gap between legacy technology and the latest fintech innovations.

3. Issues with partner connectivity

Although you may have gaps in your fintech industry knowledge when starting your business, don’t worry! Your issuer processor can help. Issuer processors typically work within an ecosystem of service providers who all help to bring a card programme to market. Helping you find the right partners and connections is a vital part of their role so you can achieve your end goal.

Carta Worldwide is well-connected within the fintech ecosystem. We can recommend services of other like-minded businesses that are tried and trusted – such as a card bureau, bin sponsorship, and/or a KYC provider.

Choosing the right partners will allow you to scale and innovate your product or service, enabling you to deliver better functionality that will keep your offering ahead of the curve.

4. What pricing model is available?

Find an issuer processor that offers you a flexible pricing model that suits your business.

Consider your own pricing model when making this decision. How do you make money once your customer is using your product?  You want to work with a processor that will slot into your business with flexibility and ease.

Usually, processors work on a flat rate model(standard cost per card amount) or on a transactional model (based on the number of accounts and transactions per month).

It is all about finding out what works best for you and your business, and how you pass down those costs to your customers.

We can tailor a pricing model depending on the needs of each fintech proposition.

5. What team will you be working with?

When partnering with a processor, you want to know you are working with a team of professionals who have a wealth of industry knowledge.

It’s important that they have expertise in your industry, global knowledge, as well as experience in many pioneering projects so they can consult you on the best ways to achieve your goals and execute your offering.

You could have the best APIs, but if your processor isn’t knowledgeable and doesn’t understand how to configure them for your needs, then the technology is redundant.

We’ve been in the industry for over 15 years so you can count on us to know the ins-and-outs of the fintech and payments sector. Our collective experience goes back a long way with one of our team working at Mastercard on the very first contactless payment!

Get to know the processor you are partnering with. Make sure that they’ll support you as you grow and scale.

Conclusion

The choice a fintech makes for its issuer processing partner is critical but it’s not always easy to evaluate options. The role of the issuer processor can be pivotal to the success of a fintech, so it is worth spending time asking the right questions.

Blake offers a range of recommendations to help guide you when deciding who your issuer processor should be, and the key attributes for evaluation.

From what tech stack an issuer processor uses to its pricing model, all should be taken into consideration. While technology plays a huge part in their capabilities, don’t forget the people and their experience.

Make sure the team you will be working with at your prospective processor is a good fit with your own. You will need to strike a close and collaborative relationship. As your business grows and scales, you will inevitably face unforeseen challenges. Make sure you are confident your issuer processor will be there to help you through the tough times as well as celebrating your successes.

Carta Worldwide is a global issuer processing solution. If we sound like the one for you, get in touch and learn more about solutions.