Traditional vs Modern Card Issuing: What’s the difference?

As the ‘new kid on the block’, modern card issuance is knocking the traditional players off their top spot, thanks to its agile tech designed to meet customers’ growing expectations.

Traditional legacy card issuing systems have been around since the mid-1960s, and although they are reliable, the technology is changing. Technology and issuing services that were once believed to be cutting-edge have now become ‘clunky’ and outmoded.

Traditional issuer processors struggle to offer the scalability and flexibility needed to create the differentiated digital-first experience that is demanded in today’s market.

Customers desire the following from their issuer processor:

• Real-time payment capabilities
• Security and fraud management
• Integrated payment options
• Support innovation and reduced time to market

But what are the real differences between modern card issuing and traditional, bank-led card programmes?

In this article, we will be discussing and comparing modern card issuing with legacy systems.

What is Modern Card Issuing?

For many fintechs, modern card issuance means delivering a fast, digital-first payment solution. It opens the door for innovative perks and customised card programmes.

Modern card issuing was designed for the digital age. Open APIs (Application Programme Interface) ensure that fintech developers can deliver new payment solutions with ease, quickly releasing them into the payments market. It also allows for more configuration and customisation options.

Modern card issuer processors will offer dynamic spend controls, issuance of single-use cards, tokenisation, and various security methods.

Using a legacy card issuer processor may pose some challenges for fintech, from outdated technologies and systems to slow lead times. Whereas, using a modern card issuer processor can help your fintech differentiate by modernising your products and service offerings.

Traditional Card Issuing vs Modern Card Issuing – What Are the Benefits?

In contrast to the legacy technologies of traditional card issuing, modern card issuers can offer fintech companies the tools to manage their risk management, shorter concept-to-market timelines, and the ability to meet the needs of today’s consumers. For example, in the case of virtual cards, modern card issuance has become instantaneous.

But what exactly are the benefits of using a modern card issuer?

• Personalisation – Recent reports suggest that businesses can achieve a 15% revenue growth through personalisation. Modern card issuing platforms have flexible APIs that allow for innovation and customisation, meaning they’re suited for the modern customer’s needs.
• Wallet integrations & tokenisation – Virtual cards are well received by customers because they can be activated and used instantly. Modern card issuance platforms allow fintech organisations to scale up and integrate cards into digital wallets. Facilitating the encryption and tokenisation of virtual card data helps to ease the integration of cards.
• Authorisation – Modern card issuance opens up the payment flow and authorises card transactions against live criteria. Issuer processors can also customise card spending authorisation based on customer risk profile, currencies, and location.
• Security & fraud management – Modern card issuance enhances the overall impression of the issuer and its security. Providing dynamic spend controls and the ability to issue single-use cards, tokenisation replaces a card’s secure data (card verification value, (CVV2), expiration date, and primary account number (PAN)) with surrogate data. When inserted in a digital wallet, tokenisation significantly reduces the potential for misuse.
• Reduced time to market – Modern systems enable a much faster time to market. It allows for rapid prototyping and for large changes to be carried out quickly. What once could have taken up to a year, it can now be done within a matter of weeks.
• Scalability – Businesses can now deliver their payment solutions to multiple locations with ease. This is supported by integration, via APIs, with major card networks. The use of cloud computing also reduces the need for planning or re-implementation processes.

What Opportunities Does Modern Card Issuing Present?

Although strong and reliable, traditional card issuing is not seen as the driver of innovation.

Modern card issuing allows fintech companies to create differentiated card programmes.

Card issuing in the modern age presents fintech with several opportunities:

• Buy Now, Pay Later (BNPL) & virtual cards – BNPL has become one of the most in-demand financing options globally, sweeping across the consumer landscape. Modern card issuing is an easy way for financial institutions to provide their customers with BNPL payment options through immediate virtual cards.
• Corporate spend cards – Corporate challenges lie in how employees can receive the money and transact, and the ability of employers to place controls to align employee spending. Modern card issuing can resolve these issues. Dynamic spend controls for payment cards can monitor spending and approve transactions in real-time.
• Consumer spend cards – Modern card issuing APIs can provide merchants such as retail marketplaces with increased visibility into consumer spending patterns and lifestyles to gain insights. By collecting more data, merchants can provide more relevant, tailored offerings to boost customer experiences.

What Does the Future Hold for Modern Card Issuing?

Despite competition from other digital payment modes, such as cryptocurrency, card transactions are projected to grow at 12.9% reaching $39.7 trillion by 2025. Making modern card issuing the backbone of the future of payments.

Modern card issuers should identify customer-orientated features and collaborate with the right partners to bring them to market both quickly and efficiently.

Fintech businesses thrive on speed and agility, leveraging the capabilities of their partners will allow them to scale through cutting-edge technology.

Next-generation issuer processors are set to provide highly flexible and configurable platforms.

With 3.8 billion people across the globe demanding increased security and convenience when making physical transactions, biometric-enabled cards will be the driver in meeting consumers’ needs. This type of card comes with powerful built-in security mechanisms with fingerprint sensors on the cards; the ability to authenticate payments based on traits that are unique to the user.

We are already starting to see biometric debit and credit cards being rolled out. NatWest was the first UK bank to unveil biometric cards. The biometric credit cards offer contactless payments using fingerprint verification for transactions up to £100.

Numberless cards are becoming a growing trend with payment providers and are said to be more secure than traditional cards that display banking information, as fraudsters cannot see the user’s card details.

This trend is becoming increasingly popular in the UK. With the likes of digital bank Chase debuting a fully numberless debit card that customers receive with their current account.

Although numberless cards are said to add an extra layer of security for users, some customers have questioned whether it will create friction when making purchases online.

Conclusion

The ability to develop and issue a customisable and flexible card programme without sacrificing security gives fintech businesses an edge over their competitors. Modern card issuing processes are simple and efficient, enabling quick development and a faster time to market.

Partner with a modern card issuing, like Carta Worldwide, to develop your payment solutions. Our technology bridges the gap between legacy payment solutions and the evolving landscape. Learn more about our platform and solutions now.