Everything you need to know to issue your own cards

Cards are a mass payment method -or a commodity-, which has been consolidated worldwide over the decades and no longer presents usability challenges for users. This positions them as the most used payment method in Latin America!

While it became a convenient medium with various usage possibilities for people, it also proved to be a potential business unit for companies, which today have the option to issue their own cards.

However, to embark on a card issuance process, it is crucial to know everything that involves licenses, technology, and security, as well as the possibilities that exist to solve it with a specialized partner. Can any company issue cards? Does it need technical knowledge or about the payments industry? Find out all the details below!

What should you consider before venturing into card issuance?

The most important thing is to define what type of card will be issued based on the business need and what you wish to offer your users. Will you offer credit, debit, or prepaid cards? What type of use will they have? Depending on your business model, you may need to partner with different industry players to resolve structural parts of the process. More information coming up!

• The issuance of cards requires having a solid technological infrastructure. You will need a card issuance and processing system and a platform to manage all your operations, among others.
• You must ensure compliance with all applicable regulations and standards for card issuance in your country or region. This includes aspects such as data protection, money laundering prevention, and compliance with regulations related to card usage.
• Finally, security is also an important concern in card issuance. You must implement robust security measures to protect your clients' information and prevent fraud. This can include technologies such as data encryption through tokenization, the use of chips, dynamic CVV, or the extra security layer 3D Secure.

Step by step: the essential elements to start issuing cards

According to our Card Product Lead, Nicolás Carrascosa, card issuance can only be carried out if the following steps are considered:

1. Define how you will become an issuer

To issue your own cards, with legal validity and commercial backing, you first need an issuer license provided by one of the major market brands, such as Visa or Mastercard. Without this, you cannot start shaping your project. Fortunately, there are two ways to obtain this license:

• Direct process with the brand: If you want your own principal member license to be an issuer, you must undergo a complex process directly with the brand, which can take more than a year. And how to choose which brand to go with? Here are some tips:
• analyze and investigate which one aligns more with your project (crypto, loans, credits, etc);
• evaluate which commercial arrangement is more convenient;
• prioritize the brand that guarantees rapid granting of principal member status.
• Hire BIN Sponsorship: fortunately, there is a faster and less bureaucratic alternative to carry out the process. BIN Sponsorship is a service offered by companies that already have the brand issuance licenses and can "lend" them to those who need it. This sponsorship ensures that companies do not have to do any processing or have direct relationships with the brands to become issuers, as it will be resolved quickly through the partner.

2. Will they be physical or virtual cards?

Of course, they can be both! However, when starting your project, this definition involves other considerations. Analyzing each type of card:

Physical cards

Physical cards are the classic option and, as mentioned at the beginning, the most used by users. Issuing them involves taking into account:

• Will they be personalized or non-personalized?: when defining manufacturing and distribution costs, this decision can be crucial. Personalized cards, which carry user information, must be printed and sent after the request, which can take days. In the case of non-personalized cards, since they do not have printed personal data, they can be ready in large quantities waiting to be sent to the user. This makes delivery times and manufacturing costs more efficient.
• Manufacturing and embossing: once the card scheme has approved your card designs, you must send them to an authorized embosser for the production of the plastics. In this part of the process, all security measures and legal considerations are taken into account so that the cards can be ready and enter circulation.
• Distribution: as with the license to issue them, you can carry out this process on your own or through a provider. If you choose to manage it yourself, you will need to survey the couriers that are most convenient for you based on the shipping costs that will be generated to your operations or users. If you issue your cards with a partner that handles this part of the process, you will outsource all the administrative management involved in the distribution of each card right to the hands of your users.

Virtual cards

For virtual cards, this process is much simpler. The management is carried out 100% digitally and the user can have access to their card directly in the platform or virtual wallet, without manufacturing or distribution processes! Thanks to this, there is no need to wait for the card to arrive at their home to use it. Additionally, the issuance of virtual cards and their activation is instant, ensuring a great user experience.

Another advantage is that they can be easily activated and deactivated through the platform for security reasons, or new ones can be created for specific uses, such as subscriptions. That's why they are increasingly chosen: a study by Juniper Research shows that in 2023, expenditures with virtual cards amounted to USD 36 billion. They forecast that by 2028, their growth will be 388%, reaching transactions of USD 175 billion.

3. Transaction processing

Here the card issuance flow closes and the processing begins, which will ensure the functioning of the cards. It is about the connection with payment networks and acquirers to:

• Allow your cards to be accepted at points of sale and ATMs;
• Then, approve or reject transactions made by all users.

Once you have issued your cards and they are in use, you must provide an efficient customer experience and adequate monitoring of the issued cards. This includes handling queries and complaints from your users, managing credits or balances, and issuing replacement cards in case of loss or theft, among other things.

Bonus track: benefits of incorporating a card business

Whether on your own or by hiring a specialized partner, incorporating a card business model will bring you multiple benefits. Among them:

• Any company can easily integrate them: whether it is a bank, financial institution, gas station, or retail company, cards can be easily integrated into any business! This is possible thanks to the embedded finance technology developed by financial solution providers. Through APIs, these companies bring the card solution quickly and easily to any business, handling the entire issuance process until the card reaches the users' hands.
• They generate income for those who choose to issue them: cards not only help businesses improve user experience, but they also generate income that will complement their core business. For all types of cards, there is the interchange fee, a percentage generated by each transaction made by users. And for credit cards or prepaid card models that provide granted credits, interesting commissions and interests are added.
• They are constantly evolving: thanks to technology, cards have evolved to meet the needs of new audiences and become part of the digital world. For example, they can be tokenized for use through mobile devices and cater to specific segments:
• Corporate cards for the management of business expenses and budgets;
• Agro cards for internal needs of their production chain;
• Prepaid cards to provide corporate benefits to employees;
• Cards for crypto solutions... and many more!

How we do it at Pomelo

At Pomelo, we develop a technological infrastructure that modernizes and enables the launch of card businesses across Latam. Through our comprehensive solution, companies of all types can solve the issuance, processing, and distribution of cards, with all the security enhancements, fraud prevention, and licenses included. This way, they gain access to a quick time-to-market and avoid managing each step of the process on their own! Card issuance can be a costly and complicated task when trying to do it on your own.

Fortunately, there are providers with the necessary know-how who not only help you save money and time with already resolved solutions, but also allow you to scale your product to new markets or integrate new features in the blink of an eye. This is a great opportunity brought by technology for companies with a different core business than fintech and for industry startups that do not have the resources available for such a complex technological development.

As part of our digitized processes, our clients can manage the named or unnamed cards they need to deliver to their users quickly through their control panel. You can learn more about our card issuance processes in Pomelo Docs, our open-access documentation!