Offering your customers a debit or credit card is a critical component of many business operations. Think loyalty and rewards cards, corporate expense cards, and personal banking cards. However, it’s not a straightforward process and there’s a lot to think about. Whilst making a payment might be simple, implementing a card product is far more complex, involving many moving parts and multiple stakeholders.
To help demystify the process, we sat down with our founder, Guy Raymond El Khoury. Here, Guy shares his expert insights on how to streamline the implementation journey and avoid common pitfalls, ensuring your card product is set up for success.
He highlights the key do’s and don’ts that every business should know before getting started, so you can confidently navigate the complexities of creating a card product and make informed decisions.
So your business needs a card product. What should you do first?
This is a critical question because it’s easy to come unstuck right at the beginning of the process.
Many people think, ‘I need a card’, so they look for a card manufacturer. It makes sense. When you want a mobile phone, you go to Apple or Google. However, the first question a card manufacturer will ask is, ‘Who is your card issuer?’. This can be problematic because many people don’t know what an issuer is.
The card manufacturer’s role is simply to produce the physical cards. They don’t issue cards. That is the job of an issuer. Another common misconception is that Mastercard and Visa issue cards. It makes sense right? Their logos are on nearly every card in the market, so they seem like an obvious place to go.
However, Visa and Mastercard are payment networks. They provide the ecosystem within which payments move from point A to point B. They’re not a card issuer. That said, they can point you in the right direction to people like Accomplish who do issue cards. So they are well worth speaking to.
That’s a good ‘do’ to start us off. Do speak to Mastercard and Visa. They have to be impartial, but can provide a list of potential suppliers and help you navigate the differences between the market offerings. There are different providers to consider, and many different entities involved behind the scenes, so really, the most important first question is, who are the key players, and who do you need to engage with first?
Okay. Let’s start there. Who are the different entities involved?
To understand the different players involved, let’s first look at how a card payment is processed.
Simply put, a card is a piece of plastic or metal with a chip on it. When you use it to make a payment, the information is captured at the point of sale and sent to an acquirer. The acquirer’s job is to initiate the payment. The acquirer identifies whether it’s a Visa or Mastercard and sends it to the right scheme. The scheme determines who the issuer is, then routes the transaction to the card issuer’s processor.
The processor acts as the technical intermediary, handling transactions between the scheme (like Mastercard) and the issuer. The issuer’s systems then run several checks, such as initiating fraud checks, verifying the PIN, and checking the card balance, before approving the transaction.
Once approved, the process runs in reverse. The issuer notifies the processor, which informs the payment scheme. The scheme talks to the acquirer, and the acquirer tells the point of sale terminal that the payment is approved.
As you can see, there are multiple entities involved at different points in the process and if you’re planning to offer a card product, you may end up needing to coordinate with all of them. They all have preferred partners, ways of working, proprietary systems and separate terms and fees, which can make the process quite complex and costly.
At a minimum, to launch your card program, you need to select a scheme and a participating card issuer for the legal and technical framework. Then you’ll need a payment processor to manage transactions, and, usually, a program manager to tie it all together Ultimately, you may also need a card manufacturer if none of your partners has one, however, a good program manager will handle it for you.
In addition, there are other elements that may be required such as anti-fraud solutions, secure customer authentication technology, compliance, KYC solutions and web and app development. Some of these can be bundled in, others have to be organised separately. All in all, there’s a lot to consider.
Is there any way of reducing this complexity?
I recommend minimising the number of third parties involved as much as possible. The ideal scenario is to work with a provider who can take responsibility for everything and has a proven track record. It ensures you have one point of contact, one decision maker, and one cost. As you gain experience, you can decide to take over certain elements, if it makes sense for your business.
However, a common mistake is believing that more third parties means more control over individual components. In reality, as the number of partners increases, so does the time needed to manage and coordinate them. It becomes almost impossible to manage the product effectively, and this approach often leads to long delays, extended timelines, and higher costs.
Working with a single provider who handles all the different elements, streamlines the entire process. Once a decision is made, it can be quickly implemented. You shouldn’t feel you need to piece together multiple service providers to get a better solution. A unified approach will ultimately be more efficient and cost-effective.
Be aware not all “single point of contact” providers are the same. Some, like Accomplish do everything in-house with our specialised sub entities existing to handle every aspect required. We do this because we know it removes all the complex overheads and headaches of organising the various parties and ultimately ensures the delivery of a superior service.
Others act as a single point of contact but actually outsource it all to third parties, which helps put everything together but does not remove the risk of delays and increased costs.
Okay. So far so good. Is there anything you’d recommend people do before reaching out to suppliers?
Yes. That’s the second ‘do’. Do become extremely clear on the purpose of your card product. Clarity is critical. Every minor change in the information you give to the different parties involved has the potential to change the way they operate the product. If the parties are not in sync, there will always be problems down the line.
How do I get clear on my product’s purpose?
That brings us to the next ‘do’. Do ask yourself the following questions. What is the purpose I want the product to fulfil? What are the benefits to the person using it? Will it be a student card? Is it a corporate expenses product? Is it a gift card? Is it a debit card for everyday purchases?
Although each scenario sounds similar, they are very different. While there are commonalities, there are a lot of technical and regulatory parameters behind the scenes that need to be specifically tailored for each scenario.
Take anti-money laundering, and anti-fraud monitoring for example. They will be set up differently for each scenario. In addition, a gift card has a specific purpose and will have different restrictions on it than say a corporate expense card. This in turn will affect the way the chip is programmed so that it complies to these restrictions. People typically don’t give a thought to the chip’s programming, yet it is the first, and in many ways, most important element of every transaction.
There are practical reasons too. A gift card might be distributed in a shop, a corporate card in an office and general purpose cards are mailed to a house. This can affect the cost. Attractive packaging for a shelf incurs different costs to branding a card for corporate use. So, there are multiple layers of differences that will affect a card product depending on its purpose.
What’s next?
The next ‘do’ is to get clear on the economics of your product. This is a must. The economics have to make sense for your business. You need to understand the overall pricing of everything you’re getting, and reduce any unknowns.
Each of your partners will have their own costs that you have to take into account when pricing the product. Some of these costs will be straightforward. Others less so.
For example, interchange; it’s common to be told that you will “benefit” from interchange. When, in fact, this is an area of deep complexity, involving numerous factors calculated with lots of different formulas and scenarios.
Giving an exact figure for the overall interchange for a project is nearly impossible. You can model for it, but ultimately, it’s still educated guesswork. There are constantly changing factors, and it’s almost always an extra cost to a project that is starting off. This is definitely an area that adds unnecessary complication and uncertainty in forecasting. To avoid this, it’s critical you insist on clearer pricing models for the sake of your product’s future.
In addition, some processors might tell you they don’t provide an anti-fraud system or Secure Customer Authentication technology (e.g. 3D secure), and that you need to source these separately. These are critical components that you can’t afford to skip, and they often come with additional charges.
This raises a critical ‘do’. Do ask your service providers if there’s anything else you need, in addition to their service? It’s easy to assume that they’ll have everything covered. They’re the experts, after all. But it’s not always the case. It’s essential to verify what they have inhouse to avoid any unpleasant surprises later. You can very quickly find out that you’re only buying the chassis of the car and that you have to buy the engine and wheels from somewhere else.
Some card product providers, like us, offer everything under one roof. We are the card issuer, the payment processor, the app developer, and the programme manager. We look after anti-fraud and SCA. Other providers require you to source additional components yourself. As before, this is important to know upfront because the more services you can consolidate under one provider, the more cost-effective and streamlined your solution will be.
When you add up the real costs of coordinating multiple providers, it’s always more expensive. A better approach is to opt for a provider that can do everything and a pricing model that provides budget certainty. Rather than a menu of costs, look for a clear, straightforward pricing. A monthly cost that covers everything will give you the certainty you need. This isn’t just important in terms of working out what the card product will cost you. It’s critical for choosing the right business model.
Choosing the right business model sounds important. How does it work?
It’s really important. With a clear understanding of your costs, you can accurately forecast your income and know precisely what your profit margins will be. Your business model is therefore a critical part of your overall business strategy. Example business models include, charging a monthly or annual fee for the card, offering the card for free as part of a larger product offering, or charging for specific activities related to your service.
Don’t assume that just because some businesses offer their card for free, you should do the same. Nothing in life is free. Everything has a cost. Companies that offer a card for free might be using it as a loss leader, and have other revenue streams that cover the shortfall.
Okay, so you are clear on each of the entities involved, you have an idea of the cost, and the business model. How do you choose the people who will manage the service for you?
That’s the next important ‘do’. Do meet the team that will be working on your project. Salespeople are very good at selling the dream, but they won’t be the ones managing your project. Some providers, like Accomplish, ensure that the people selling you the product are also responsible for running the project, making them accountable for its success.
That’s not how all providers work, so it’s crucial to know who will be serving you and managing your product. The experience you have with sales can be very different from the one you have with the operational team.
First, consider the human factor. Do you get along with your operations team? Does their approach align with how you want to work? Then there are practical considerations. How will you contact them? How available are they? How often will you meet? Can they fulfil the promises made by the sales team?
It’s also important to ask about hypothetical scenarios. Things like, when something goes wrong, as they inevitably will during development, what is the response process? What are the agreed response times? How can you reach them quickly?
If you want to change a feature on your product, what’s the process? How much will it cost? How long will it take? Who is involved? This is really important. No product stays the same forever. They are constantly evolving. You should know upfront what’s involved if you want to change something like a feature, a fee or a spending limit.
In this industry, there are providers who will charge for every change, often at exorbitant rates. I’ve seen banks charged tens of thousands of pounds for minor changes. There are a lot of hidden costs in this industry, and it’s important to uncover them before committing to a price.
We believe these adjustments should be part of the service. We’ve built our system to make these changes easy, so we don’t need to charge extra. It’s all included. We expect tweaks and changes, and we work with clients to make them happen. We want our products to be as useful as possible, which means adapting to the changing needs of our clients and their end customers.
Ask about the technical tools you’ll be provided. Can you self-serve? If you need to check the system or get a report after hours, can you do that yourself, or do you have to wait until your provider’s office opens? What do these tools look like? Can your team have access? Can you create different user roles and define access levels for people within your organisation? What is available by API?
Which brings us to another key ‘do’. Do ask lots of questions.
Be sure to check out the second part of our article.