Card issuing and management: staying relevant facing ever faster changing customer expectations

How card issuers are rethinking their business models and technical architecture

Our payments landscape is changing rapidly, and traditional card issuers need to keep up with new competitors that meet customer expectations. Especially now, during times of lockdowns and working from home, customers are expecting digital services that are seamlessly integrated into their every-day lives. This means that Issuers have to rethink both their business models as well as their technical infrastructure to keep up with competitors and customer expectations.

Convenient, fast and reliable

First of all, how popular are card-based payments nowadays? As research shows, this payment method will play a major role in the near future. By 2022, it is estimated that 47 percent of global e-commerce payments will be made using eWallets, while 28 percent will be made using credit and debit cards. At the point of sale (POS), it is expected that 52 percent of all global POS payments are made using either a credit or debit card, with eWallets (28 percent) assuming the third place. These numbers have to do with the fact that consumers find card-based payments convenient, fast, familiar, reliable and secure. A little further in the future, we are likely to see the general replacement of tangible plastic cards by alternative means of payment like mobile payment apps and virtual cards. However, the payment itself will remain card-based and will, thus, to a large extent rely on the established infrastructure of schemes like Visa, MasterCard and local schemes.

Crowded Landscape

This is the reason that the card issuing landscape is getting increasingly crowded as new players spot opportunities to tap into the unresolved growth potential of the card payments industry. Over the years, many traditional banks have delivered card payments services on a ‘license to operate’ basis, meaning that they have typically issued basic products like debit, credit and prepaid cards and have not shown any interest in differentiating themselves through these products. Neobanks seem to be utilising the full potential of cards and card payment services by making them the focal point of additional services. This places the cardholder at the center of the payment experience. Think about services and features like real-time information on transactions, convenient onboarding processes and product control (for example spending limits and geo-blocking).

Challenges

As a result, traditional card issuers are feeling the pressure of increased competition. It urges them to transform their card processing platforms to remain competitive, but there are a number of internal and external challenges that need to be overcome. Think of diversifying channels and the demand for a consistent experience or the creation of new technologies that are disrupting financial services and the arrival of regulations like Open Banking, PSD2 and GDPR. Other than that, players are forced to focus on efficiently processing massive volumes to make the business case viable. In the meantime, internal challenges play a key role as well. Traditional players are, for example, struggling with their legacy systems and their ability to leverage the vast amount of data points produced by transactions. Besides that, players need to protect sensitive data and actual monetary transactions against fraud. And there is also the struggle of managing the increasing number of compliance procedures.

The Solution: Open Innovation

While there are many interesting solutions from Fintechs and other third parties available that address some of these challenges or simply offer a superior frontend experience, they are often hard to integrate into existing legacy applications and some processing partners do neither offer a modular platform nor the commercial flexibility required to quickly test and integrate third party solutions. At Worldline, we are convinced that the best results come out of open innovation. That is why we are hosting the annual Worldline e-Payments Challenge where we bring together our clients and fintechs to create innovative use cases together with our experts. Our modular, real time processing platform allows for simple integration of these solutions based on a large and powerful set of APIs.

Are you looking for creative ways to address the challenges Issuers are facing today? Get in touch with our experts to learn how Worldline can support you. Contact Us: worldlinecommunications@worldline.com