Guides and reports

The evolution of modern card issuing

Discover how modern card issuing has transformed B2B payments for enterprise businesses and platforms and how you can enhance your card program with an end-to-end setup.

October 4, 2023
 ·  8 minutes

Modern card issuing has become increasingly popular as companies seek to optimize business-to-business (B2B) payments. Commercial card programs let you optimize payouts, control risk, and increase revenue.

Thanks to a flexible API-driven approach, modern card issuers offer a clear path to harnessing the benefits of a card program compared to traditional banks. However, many issuers have multiple third-party dependencies, adding risk to your card program.

This blog post will give you a better understanding of the advantages of modern card issuing, which are especially relevant for expense management, supplier payments, and SaaS platforms. We'll also look at the limitations and how the next advancement in this field can solve them: end-to-end card issuing.

Traditional card issuing vs modern card issuing

Originally conceived as an alternative to cash for consumers, payment cards have evolved into a highly efficient means of facilitating large-scale B2B transactions. 

Let's look at how we got here.

Challenges with legacy solutions

Traditional banks were the first to develop card issuing solutions. Initially built for the bank's own use, these solutions lacked the capabilities to easily integrate with other systems. 

Although banks had the necessary licenses and network memberships to support card issuing, integrating their legacy technology with businesses' infrastructure took a lot of work. This resulted in time-consuming and inflexible setup processes, with limited room for customizing the card programs to businesses' specific needs.

Modernizing card issuing with added technology

Modern card issuers aim to make launching a card program more accessible through an added layer of technology. This technology allows modern card issuers to communicate with bank and network infrastructures through APIs. 

The API-led approach to issuing reduces implementation times and allows for the creation of tailored card programs that align with your business's unique requirements. You can pick and choose which features you want to use and easily add them through simple API calls.

How modern card issuing changed the industry

Modern card issuing brings multiple benefits to both your business and customers. Let’s have a look at the most notable ones.

Easy to adopt and deploy

Time is money. Because modern card issuers take an API-driven approach, implementing their card issuing solutions is fast. Their tech-first mindset reduces implementation times and will have your card program up and running quickly.

If you want to gain even more speed, you can skip the process of approving and manufacturing physical cards by launching a digital-only card program. 

Supports customization and personalization

One of the standout features of modern card issuing is its ability to offer customization and personalization. Modern card issuers' flexible APIs empower you to craft a card program that aligns perfectly with your unique requirements. 

Whether you prefer to issue physical cards with your branding or provide virtual cards for added convenience, the choice is yours.

Maximizes revenue

Modern card issuing isn't just about enhancing user experiences or streamlining payments; it's also a powerful tool for increasing revenue by opening up new revenue streams. You receive a share of the interchange fee for every card transaction processed through your issuing program. This can substantially impact your finances by transforming your payment operations from a cost center into a revenue driver, helping your business grow in the competitive landscape.

How businesses are using modern card issuing today

Businesses have adopted modern card issuing for various use cases. While it has proven valuable over time, it has also presented challenges and limitations.

A new way of issuing cards has emerged as an innovative solution to these limitations. Before diving into this, let’s explore how businesses use modern card issuing today and what challenges they face.

Expense management

As an expense management provider, you’re offering a solution that streamlines the expense process for your customers. This means eliminating as much of the error-sensitive manual work as possible, such as submitting, reviewing, and approving expenses. 

By adding cards to your offering, your customers can issue cards to their employees for business expenses. They can set spending limits for amounts, locations, and merchant types. This removes the need to manually submit and approve expenses after the spending, reducing disputes and the risk of error as the process is automated.

However, with most modern card issuers in the market, you often still have to deal with third parties. Whether direct or indirect, you can end up with various integrations and agreements with third parties like banks, KYC providers, and risk management solutions. This creates unnecessary complexity and can result in an increased risk of errors, slower speed to market, and difficulty in ensuring the same experience everywhere.

Want to learn more about the impact this complexity can have on your business and how you can improve your card offering for expense management and employee benefits? Check out our guide.  

Supplier payments

If your business involves paying suppliers on a large scale, you know the importance of fast and reliable payouts. With modern card issuing, you can streamline the payout process and ensure your suppliers always receive their money on time by leveraging virtual cards. 

Take an online travel agency (OTA) as an example; they have multiple hotels, transport options, and activities connected to their platform. The user experience for travelers who book and pay through the platform is great, but ensuring that hotels and airlines across regions receive their money at the speed they want is a challenge.

Modern card issuing can solve this by providing a reliable and automated solution for instant supplier payments at scale using virtual cards. However, the incoming and outgoing funds are decoupled as they are handled by separate acquiring and issuing banks, creating the need for high working capital or lines of credit.

Interested in optimizing your setup for supplier payments by linking acquiring and issuing? Check out this guide.

Embedded finance

As a SaaS platform, you're empowering businesses, such as beauty salons or restaurants, with essential tools to run their operations. Your software helps them manage their bookings, do accounting, and invoicing. For a fully comprehensive solution, your customers also need financial services.

Platforms that have embedded payments into their offering remove much of the friction regarding payment acceptance for small businesses. They create a solid foundation to expand into the next frontier of exceeding their users' expectations: embedded finance.

Integrating financial services into your platform can eliminate delay of fund movement. By embedding money management accounts into your platform, you can make incoming funds instantly accessible for users.

Now, this is where card issuing comes in. Adding cards to your offering allows users to spend their earnings using platform-issued cards straight away, bypassing the need to wait for transfers to their external business bank accounts.

Currently, there aren't many providers that offer an embedded finance suite, but those who do deal with the same dependencies as mentioned before. Since they don't own the right licenses, they are limited by third-party restrictions in how businesses can offer these financial products to their customers.

Want to dive deeper into the opportunity embedded finance presents to platforms? Check out our BCG report.

From modern to end-to-end card issuing

Modern card issuing has made setting up a card program easier and more accessible. However, these solutions are still built on legacy infrastructures that depend on multiple providers. This makes them prone to slow innovation, intransparent pricing, increased risk of error, and delays in cash flow. 

These issues can be avoided by using an issuing partner that owns both the technology and the right banking licenses.

A true end-to-end card issuing solution with our single financial technology platform

Adyen Issuing is the first true end-to-end issuing solution. What makes it end-to-end is that we've built it in-house for enterprise businesses and have our own banking licenses. We provide the same flexible API-driven technology that modern card issuers provide, making the integration and management of card programs fast and flexible. 

This unique combination of owning our technology and banking licenses eliminates the need for third parties, allowing our customers to experience the benefits of modern card issuing with added speed and stability.

A technology provider, acquirer, and issuer in one 

Since we're a fully licensed acquiring and issuing bank in the EU, UK, and US, we can combine issuing and acquiring within a single platform. This allows businesses to make incoming funds instantly available for supplier payments to issued cards, minimizing the reliance on high working capital or lines of credit. Businesses can benefit from virtual card payments without the delays caused by a fragmented setup. 

Since we don't rely on third parties, we also have the freedom to drive innovation at our own pace. Because we have control over our entire infrastructure, we can align our solution with the evolving needs of our customers.

Scale across markets from the same integration

If you’re an expense management company or SaaS platform, you can manage all card programs through the same platform and offer the same experience everywhere. With our end-to-end card issuing solution, you can enjoy all the benefits of a global card program with just one single integration, one provider, and one contract. You can rely on us to help craft a card program that meets your needs and lets you focus on your core business.

Our platform allows you to scale your card program to different markets through the same integration, eliminating the complexity of finding new partners in every market. You don't have to worry about local regulations as our technology meets compliance in the markets we operate. 

Transparent pricing

Since we own the entire value chain and don't depend on third parties, the scheme fees are the only external fees included in our pricing. We have complete control over our pricing, making it transparent and static, in contrast to the vague and dynamic pricing determined by third parties.

The model we use for pricing is called interchange - -. Since our pricing is transparent and consistent, the interchange fee share you receive will be predictable.

Are you ready to take the next step in card issuing?

With Adyen's end-to-end card issuing solution, you can optimize your payment setup to new extents.

Our platform and banking and acquiring licenses provide total control and unparalleled flexibility. Say goodbye to complex, third-party dependencies and hello to a complete, seamless solution. 

Are you interested in learning more about how Adyen can help you elevate your issuing strategy? Reach out to us and we’ll help you with all your questions.

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