For businesses that want to go beyond using credit cards, and instead want to issue credit cards, Credit Cards as a Service (CCaaS) promises technology that allows businesses to issue cards quickly. Here’s what you need to know.
Why Is Credit Card as a Service Important?
Traditionally, credit cards have been issued by banks and larger financial institutions. That’s because credit card issuing has, in the past, required significant financial investments in technology, compliance, customer service and more.
In the US, for example, more than 85% of credit card spending has been on cards issued by the top 10 issuers.
In that model, retailers or brands that wanted to issue cards to their customers often worked with these banks and issuers to create co-branded card programs or private label (white label) cards rather than developing their own credit cards. Even that approach was usually time consuming and expensive for companies that wanted to offer credit cards to their customers or target audience.
That’s all changed in recent years due to technology and offerings that can help businesses or brands launch virtual credit cards, prepaid cards, debit cards, or physical credit cards using CCard as a Service (CCaaS or sometimes just CaaS). The term CCaaS refers to technological solutions that help facilitate the issuance of credit cards (and often other payment cards).
CCaaS falls under the broader umbrella of embedded finance, which can also encompass offering bank accounts and digital payments.
With CCaaS, brands or businesses that want to issue credit cards may be able to launch a card program in a few weeks or months, rather than years. While these cards will carry the Visa or Mastercard logo, they prominently feature the brand’s logo. They can be tailored with features that reinforce the brand relationship, and bring value to cardholders through custom rewards, better service and/or lower fees.
Both commercial credit cards and consumer credit card products are available through CaaS, using card issuing APIs that help streamline issuance and time to market.
Companies that offer these credit cards aren’t just trying to reinforce their brand, though. The companies that offer these cards can share in “swipe fees,” the interchange and credit card processing fees that are paid every time a credit card is used to make a purchase.
Who Offers Credit Cards as a Service?
An increasing number of providers offer Cards as a Service. They include:
Bend by FNBO is a CaaS offering from First National Bank of Omaha. Already a popular partner for co-branded credit cards, this new offering is in partnership with Marqeta, and allows for plug-and-play financial services that fintech companies can integrate with current offerings.
Brim partners with companies that want to use its Payment as a Service platform to issue cards, or offer Buy Now Pay Later (BNPL) programs, mobile and digital banking, with loyalty and rewards programs. It has an international network of rewards partners.
Cardless helps brands launch credit cards and reward their customers with experiences, merchandise, and exclusive offers. It promises $0 startup costs.
Deserve offers CaaS to allow partners to offer both consumer and business cards with customized rewards. Services include underwriting, compliance, customer service and risk management. They offer the option of using their issuing bank or others.
Dock allows issuers to provide virtual or physical credit cards. Dock is the first Credit Card as a Service solution from Latin America. If allows companies to fund the program themselves (BIN Sponsor) or through third-party funding (Partner BIN Sponsor).
Enfuce offers an end-to-end solution for issuing credit cards and charge cards with a variety of card management features including “spend control” that can be used to decide where and when cards can be used.
Hyperface offers a customizable Credit Cards as a Service platform along with a white-label Buy Now Pay Later (BNPL) platform. It promises real-time rewards and intuitive onboarding journeys.
Marqeta is known as a major player in this space, and offers flexible solutions including open APIs that have been used by companies such as Square, Uber, Instacart and DoorDash to issue credit cards quickly.
Railsr (formerly Railsbank) offers a turnkey solution that allows brands and businesses to embed virtual cards or physical cards (debit, pre-paid, or credit card). It says it can help a brand launch a card in as little as 12 weeks, including custom rewards.
Stripe Issuing allows businesses to create commercial card programs without set up fees. It allows issuers to launch a program in days with branded cards, digital wallet support and dynamic spending controls.
What Is the Future of Card as a Service?
Thanks to the technology that allows card programs to be launched quickly and efficiently, more companies will be able to offer credit cards or other payment solutions to their customers using CaaS technology. “Almost every brand in America is up for grabs and this space is wide open,” writes Cokie Hasiotis on LinkedIn.
Use cases are unlimited, and currently range from companies that offer crypto wallets and want to issue crypto rewards, to card programs that can be replicated across multiple countries. Marqeta promotes offering cards for employee spend or supplier payments. Cards can also be offered along with checking accounts and savings accounts to create a holistic financial experience.
This approach to issuing cards is only expected to grow. At the same time, competition is intense, especially in countries like the U.S. where card saturation is high. Companies that want to offer credit cards, BNPL or other payment options will need to differentiate themselves with an excellent customer experience and unique, targeted benefits if they want to stand out and earn market share.
Dash.fi, for example, was built as the world’s first platform to allow businesses to scale ad spend with unique benefits, including higher spending limits and unlimited cash back rewards.
