Who needs a card programme partner?

Businesses may think that providing a card payment offering to their customer is impossible.

However, the rise of card programme managers and BIN sponsors make it a reality to issue cards for several use cases that go beyond the financial services and fintech industry. Here are some examples of how your business can leverage card programme management.

Retail

In the highly competitive retail industry, shopping malls, community retail centres and retail brands are looking to drive customer loyalty. Some grocery stores have offered credit cards for years, and some of the most ambitious ones even offer banking services.

For smaller retailers, card programmes now make it possible to issue payment methods as a new revenue stream. Prepaid cards that customers can reload at their convenience and use across a network of partners, for example, or other forms of gift cards and store value cards are gaining popularity in their physical and virtual forms. With a card programme manager beside them, retailers can craft their own card offering focusing on their clients while their partner handles the processes of issuing cards and consolidating information in full compliance with local regulations. The card programme manager can offer a variety of cards with functionalities ranging from Direct Debit to Buy Now Pay Later (BNPL), creating a superior and differentiated experience for the end user.

Insurance

The insurance industry is in the midst of its digital transformation, with new expectations from policyholders and the rise of insurtech setting new standards.

Insurers have three core areas to focus on:

Obligation: to reduce costs by improving claim handling accuracy and reducing claim expenses.

Necessity: to deepen relationships by expanding the current ‘repair, replace and refund’ model to include detection and prevention.

Differentiation: creating new revenue streams by rethinking traditional insurers’ roles and transforming themselves from a product-focused company to be more service-centric.

Therefore, a card programme is an ideal route for insurers that want to digitise the policyholders’ experience. Virtual cards can be issued as a payout mechanism, enabling a seamless service and creating real-time data intelligence that can help insurers better serve their clients.

Another area of interest in card programmes is to ensure better transparency and security. For example, these payment methods can provide control for vetted medical/car/housing/travel policyholders. For insurers that use traditional account-to-account transfers, the complexity of consolidating and tracking information is cumbersome. With virtual and physical prepaid cards, insurers can lower costs, serve their clients more efficiently and review and consolidate data as well.

Additionally, a card programme is useful to insurers as payouts can be released instantly at the precise time of need, boosting customer satisfaction and creating a unique selling point.

Startups & Fintechs

When launching a startup, whether in the fintech industry or not, founders are often faced

with the choice of whether to build, buy or partner when it comes to the technology and payment stack.

While different models can be adopted, many new players decide to tap into card programme management as a way to kick start their business and scale at their own pace. Fintechs active in payment, financial inclusion, Buy Now Pay Later and other areas look to card programme managers to issue cards and handle the entire payment process, while they can focus on building their own digital experience. The benefits of this approach are numerous, including speed, reduced and scalable costs, efficiency and superior payment experiences they would not have been able to build on their own.

Remittance

Cross-border payment companies have often relied on cash transactions to help the financially excluded to move money from one area to another instantly. With more and more workers on the move, cross-border payments are seeing tremendous growth that is set to continue over the coming years.

Despite the growing market for remittances, money transfer operators (MTOs) find it difficult to remain in business due to fierce competition and pressure to reduce fees. The main concern for MTOs lies in customer loyalty. Customers are very quick to move to a new MTO if they are offered a better deal.

To succeed in the new digital world, card programme managers bring a holistic solution to help MTOs realise their end-to-end remittance service strategy. A host of both physical and digital payment services help complete the traditional over-the-counter money transfer. Prepaid cards in their virtual forms are a cost-effective way to include underserved segments while giving customers the capability to shop online. In their physical form, branded in collaboration with an international card network such as Visa or Mastercard, payment cards help advance the experience one step further by granting access to international payments when travelling as well as access to cash from ATM networks.

These services are a great addition for MTOs that wish to embrace digital transformations and provide digital nomads with added value services. MTOs manage foreign currencies in mass with cards often use for payroll activities. Offering more payroll services would create additional revenue streams on the long term.

Microlending

Microlenders are popular for disbursing small amounts of cash to customers and businesses for a specific purpose, whether a micro enterprise capital need, equipment purchase or something else. Often seen in the nonprofit sector, many microlenders focus on lending to women, minorities, and other underserved entrepreneurs.

Microloans work like regular business loans, except they’re not issued by traditional banking institutions. Individuals, nonprofit organisations, or alternative lenders typically issue these microloans. This means that it is often very dicult to expand their business with additional financial services. Card programme managers have become handy for microlenders as they help solve many of their challenges. 

Microlenders must have the capability to either disburse cash by hand or through a network of partners, or tap into a bank network if the entrepreneur actually has a bank account, which is rare in emerging markets. Card programme managers solve these challenges. They bring the regulatory framework to enable microlenders to bring loans to digital payment methods. They can handle the entire payment process for issuing these payments either virtually on a mobile phone or in person. This model helps reduce costs and disburse recurring loans on digital or physical cards that can be topped up.

Card programme management is a game changer for solving financial inclusion challenges. It also oers an extra layer of features that can enable a microloan to be used only at partner outlets, for example.

For microlenders, card programme managers augment their financial services capability, while maintaining their status and so they don’t have to source financial licensing. It creates new revenue streams while enabling a long-term journey with borrowers and the precise measurement of their initiatives.

Corporate

Corporate businesses are increasingly seeking improved solutions for managing corporate expenses, travel, payroll, and supplier payments. In the past, handling employee expenses and supplier management involved significant administrative work and paper-based receipt and invoice management. However, modern businesses now have faster and more efficient alternatives, with corporate payment cards emerging as a popular choice. These cards save time and money by granting employees and suppliers controlled access to company funds.

These card programmes provide corporates with enhanced control over spending. Each card is associated with a specific employee or supplier, with payments allocated to designated budgets. Spending limits can be set, and all expenses are processed and approved or rejected centrally, streamlining the financial management process. Additionally, corporate cards tailored for travel offer convenience for the travellers, giving them peace of mind as well as efficient expense management. Corporate cards can come in various forms: physical or virtual, prepaid or credit, single use or top up, airline specific and more. They contribute to a streamlined and efficient approach to corporate financial management, addressing the evolving needs of modern businesses.

Education

Governments around the world often have a student grant scheme that covers full or part of education fees. These government subsidies are necessary, they can be inconvenient to claim and often aren’t  issued at the point they are required. 

For governments that wish to digitise their grants, card programme managers have created a smart way to serve students through student payment cards. Students benefit from a payment method to receive the funds, while funds can also be limited to certain purchases; for example payment for an assigned college, purchase of equipment at partner libraries or stores, accommodation payments and the like.

Once again, the management of these subsidies can be more transparent, flexible and instant with the use of physical or virtual cards, while students can get accustomed to financial management before they join the working world. Card programme managers handle all regulatory aspects to disburse cash and report on the funds usage.

How does card programme management work?

The type of card programme your business needs depends on who your customer or primary audience is.

What problem do they need to overcome, and how can you provide them with a service that solves this problem for them?

In essence, a card programme is about ideating, designing, implementing and growing the most suitable card product for your customers’ needs. There are several key steps to think through as they are essential to the success of your card programme.

Ideation

Before you engage in a card programme initiative, it is important to ask all essential questions about why a card programme would be useful to your business. For example:

• Do you have challenges tracking payments for your audience?
• Are you losing money with your current setup?
• Do you need to embrace a digital approach?
• Do you wish to generate new revenue?
• Do you want to replace cash disbursement?
• What do your customers or audiences need?
• How many clients do you need to serve?
• How often would they transact?

It’s important to consider the issue carefully to ensure you ask the right questions. From the answers to these questions, you can create a solid plan based on valid reasons for issuing cards to your audiences.

Design

In terms of designing a card programme, you need to think about not just the look and feel of the product, but how the service will work behind the scenes.

Defining an effective card programme will involve choosing its structure, revenue model, features, unique selling point, key benefits, rules, and conditions. On top of this, you will need to market your card with the right design and branding for both the physical and virtual experience, choosing the right scheme partner (such as Visa or Mastercard).

Issuing

In simple terms, the process of issuing involves creating and distributing custom cards to customers, allowing them to make purchases or earn rewards.

This includes utilising BIN (Bank Identification Number) sponsorship from a financial institution to process payments without a direct relationship with a card network. Additionally, a card programme manager is required for securely managing customer accounts, handling inquiries, and resolving disputes or chargebacks.

Cardholder onboarding & bank sponsorship

When a consumer or a business applies for a payment card, they must go through an onboarding process.

This process includes Know Your Customer (KYC) checks to comply with Anti-Money Laundering (AML) regulations, as well as securely collecting and verifying their data before determining the appropriate products to offer them. This onboarding can only be done by a bank sponsor or BIN sponsor as they are authorised by central banks to conduct such checks depending on the card product offered.

Card programme 

When a consumer or a business applies for a payment card, they must go through an onboarding process.

This process includes Know Your Customer (KYC) checks to comply with Anti-Money Laundering (AML) regulations, as well as securely collecting and verifying their data before determining the appropriate products to offer them. This onboarding can only be done by a bank sponsor or BIN sponsor as they are authorised by central banks to conduct such checks depending on the card product offered.

Risk and fraud management

It’s vital that card programme managers put in place rigorous risk management and fraud prevention strategies to protect both your business and your customers from fraud, identity theft and data breaches.

Any respectable strategy should include transaction monitoring systems, which use rules and machine learning to identify, flag, and potentially block suspicious activity. Security measures like 3D Secure can also help to prevent fraudulent activity by requiring customers to complete two-step authentication.

Compliance and regulation

Following rules and financial regulations is critical when running a card programme.

These rules help keep your cardholders safe and ensure the payments system works well without any errors. The main rules include the Payment Card Industry Data Security Standard (PCI DSS), anti-money laundering (AML) rules, and Know Your Customer (KYC) guidelines.

Customer acquisition

The performance of your card programme will rely on acquiring new customers gradually and reaching your targets to ensure profitability of your business.

Your card programme should consistently provide you with high quality data about cardholders, transactions, and reconciliations. This data helps you group your audience, grasp their requirements, and tailor campaigns with new benefits or seasonal promotions.

Retention and loyalty

It is important to ensure your customers continually feel appreciated.

To keep cardholders and ensure your programme remains profitable over time, it is crucial to oer incentives such as rewards, cashback, and insurance as added benefits to your customers.

Reporting and analytics

Utilising reporting and analytics enables you to evaluate how well your card programme is performing and make any needed adjustments or enhancements.

It is important to monitor transaction volumes, customer acquisition costs, and rates of customer turnover. Additionally, analysing customer behaviour and preferences is crucial.

Change management

As technology continues to evolve, your card programme managers need to act as your guide to adapt and navigate any major market changes, regulatory shifts and technological upgrades.

Card programme managers will assess impacts, manage stakeholder expectations, and establish transition procedures. They also plan system upgrades, maintenance, and scalability to accommodate growth and changing business needs.

Discover Flex, Paymentology’s card programme management service

Paymentology is a next-generation issuer processor with a department dedicated to serving businesses that require their own card programmes.

This service is currently delivered across South Africa and we intend to expand it to Europe, in the UK as well as other African countries.

As your trusted card programme manager, Paymentology seamlessly handles the responsibilities of card product issuance for non-financial institutions across various sectors, including remittance providers, payroll companies, shopping malls, and retail and corporate brands, in selected countries. 

Paymentology’s comprehensive suite of card issuing services ‘in a box’ deliver cutting-edge debit and prepaid card products, available in both physical and virtual formats, with unprecedented speed and a superior payment experience. 

Renowned industry brands such as Standard Bank, Access Bank, Mama Money, Avis, Altech, NewPay, Adumo, Europcar, Mukuru and Spar have placed their trust in Paymentology to orchestrate their complete digital or physical card and payment experiences. Whether catering to end consumers, employees, students, or partners, Paymentology ensures a seamless and secure card journey that leaves a lasting impression and creates stickiness.