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Payment cards market trends 2023
For more than a century, payment cards have been a fixture in the banking world, enabling consumers to make cashless payments for goods and services. Now the dominant form of payment in the world, the earliest version of a credit card was the Charga-Plate, which looked like a dog tag and had customer details embossed on it.
The extent of the growth since the first card was created in 1920 has been staggering. Some three billion credit cards are now circulating the world payment system. The number of credit, debit and prepaid cards increased by two billion cards to 25.2 billion between 2019 and 2021, according to Statista and this number is expected to grow by 21% between 2021 and 2025 before leveling off. Visa alone processed some 190 billion transactions in 2020.
Over the past decade, the alternatives to credit card payments have multiplied to include other digital forms of payment that include digital vouchers and tokens enabling payment on mobile phones via SMS, Buy Now and Pay Later (BNPL) schemes, mobile wallets, contactless payments using Near Field Communication technology, QR codes and cryptocurrencies.
However, consumers still rely heavily on their credit cards to make payments, with Americans and Europeans on average owning as many as four cards. More than 90% of Americans have credit cards with a balance of $5,313 each. In the UK, nine in 10 adults have debit cards and six in 10 have credit cards.
With the four major networks processing $4 trillion credit transactions, it’s little wonder that fintech trailblazers in the payments industry still issue plastic cards when they go to market even though they have so many innovative digital payment alternatives to offer their clients.
In the face of competition from fintech disrupters, card schemes have significantly improved their offerings by introducing contactless payments, tokenization services and new security measures. These steps put them in a stronger and more sustainable position to fend off the competition that comes from disruptive technology and alternative payment methods. Given the clear customer preferences for payment cards, credit and debit cards are thus unlikely to disappear anytime soon.
What is a white-label card?
The term 'white label' refers to products or services made by a third party but sold under a distinct label. Retailers often adopt white labeling to offer products created by external manufacturers.
Nevertheless, white-label solutions are now extending beyond the retail realm. They are gaining prominence in the financial sector as well. For instance, in white-label card issuing, a business can issue a card under its own branding. The card's functionality is facilitated by third-party card network and payment processing services, ensuring cardholders receive the necessary features. White-label cards typically offer rewards, loans, discounts, and other benefits specific to the business.
In the regulated financial sector, card issuers are required to obtain an issuing license before commencing operations. Opting for white-label card issuing offers a streamlined alternative. By partnering with established card issuers, you can efficiently introduce your branded cards without the necessity of obtaining a separate issuing license.
White-label cards come in various types to suit different financial needs and preferences. Here are some common types of white-label cards:
Debit cards. These cards offer users access to funds in their bank accounts. They are often used for everyday transactions and ATM withdrawals.
Credit cards. Similar to traditional credit cards, these allow users to borrow money up to a certain limit for purchases and repay it later.
Prepaid cards. These cards are loaded with a specific amount of money in advance, making them ideal for budgeting and controlling spending.
Virtual cards. Virtual cards exist only in digital form, providing a secure way for online transactions without a physical card.
Payroll cards. These cards are used to pay employees' salaries and benefits and are similar to a white-label prepaid card. However, employers directly deposit their employees' wages or salaries onto the card. This eliminates the necessity for direct debit transfers or cash payments, providing workers with swift, adaptable, and secure access to their funds.
Expense cards. These cards are issued for specific purposes, e.g.management of business expenses, and can have spending limits or restrictions.
White-label card issuing offers businesses a range of advantages:
Branding and customization. White-label cards can be tailored to match a business's branding, enhancing brand visibility and customer recognition.
Speed to market. Becoming a card issuer, securing licenses, and starting your own card program from the ground up demands substantial effort and resources. Choosing white-label card issuing allows for a quick introduction of new offerings and a market presence established before saturation.
Cost savings. Likewise, white-label card issuing enables businesses to offer branded cards without the expenses needed to start a card program from scratch. Essentially, you're incorporating your branding onto a proven product, avoiding the need for product development, testing, and regulatory compliance.
Customer loyalty. Offering branded cards with rewards, discounts, or exclusive benefits can foster loyalty and encourage repeat purchases.
Smooth operations. The financial services sector involves many contributors, including merchants, card issuers, payment processors, and card networks, all working together for each transaction involving debit, credit, or prepaid cards. Most of the time, this system runs smoothly, but a single glitch can disrupt the entire process. By opting for white-label card issuing services instead of starting your own card program, you tap into the existing, well-functioning infrastructure. This ensures your cardholders experience seamless functionality, security, and dependability.
Advantages of white-label cards for consumers:
Personalized benefits. White-label cards offer tailored rewards, discounts, and exclusive offers, enhancing the consumer's shopping experience and saving them money.
Simplified shopping. These cards streamline purchases within specific stores or brands, making transactions convenient and focused on preferred retailers.
Accessible credit. Consumers with varying credit profiles can often access white-label cards, helping them build or improve their credit history through responsible usage.
Use cases for white-label card issuing:
Neobanks
A lot of neobanks have adopted the white-label card approach. A prime example is Revolut, showcasing this innovative trend. With Revolut's white-label card, spending money across various currencies becomes effortless, especially for international travel. Unlike traditional banks, Revolut empowers its customers with full control over their banking interactions. Users can choose between NFC and magnetic stripe technologies for their payment preferences.
Retail and e-commerce
The white-label credit program enables retailers to provide customers with relaxed and extended payment terms. These credit cards encourage higher spending by offering the convenience of deferred payment. Customers using white-label credit cards often earn loyalty rewards, fostering repeat business and loyalty. Additionally, such cards enhance convenience through features like hassle-free returns without receipts. Retail giants like Macy's, Amazon, Target, Walmart, Kohls, Neiman Marcus, and other famous brands often adopt private-label credit cards as part of their offerings.
For example, the Amazon Credit Account, a virtual cardless private-label credit solution, mirrors a store card in the online realm. For frequent online shoppers, the Amazon Prime Store Card is valuable, offering up to a 5% cashback on all purchases. This card also provides no-interest financing for significant purchases, though its usage is restricted to Amazon transactions.
Gig economy
Gig platforms have gained immense popularity, particularly among the younger demographic. The pandemic further amplified their appeal due to its disruption of traditional businesses, driving the surge of these platforms. As time progresses, the number of gig platforms continues to rise, each striving to introduce innovative technologies. One such notable advancement is the integration of white-label credit card solutions.
A prominent example of this trend can be seen in Fiverr, a platform that connects freelancers with companies seeking temporary services. Fiverr has embraced white-label card solutions to enhance user experience. By offering the Fiverr card, consumers can swiftly transact and access their earnings, a critical advantage in the gig economy.
Fleet (fuel) cards
Fleet white label cards are specialized payment solutions tailored for businesses operating a fleet of vehicles. These cards bear the branding of the business issuing them and are often offered in collaboration with financial institutions. For instance, a delivery company might provide its drivers with white-label fleet cards that can only be used to purchase fuel and services. These cards streamline expense management and offer benefits like discounts on fuel purchases, enabling companies to track and control their fleet-related expenditures efficiently.
Corporate cards
For large organizations with numerous employees, a comprehensive approach to managing employee-initiated expenses is crucial. Integrated platforms and tools are essential to ensure satisfaction on both ends. Incorporating a white-label corporate credit card into an enterprise expense management program is advantageous for both employees and employers. It streamlines processes, eliminating the need for manual tasks like expense reporting and payroll management.
For SME owners, customer loyalty and employee perks are vital. Tailoring services for both can grant a competitive edge over rivals lacking similar offerings. Providing customers with options like installment payments or reward cards for discounts can significantly impact the bottom line.
White-label cards market: overview and prospects
While some once speculated about the gradual decline of white-label cards, also referred to as private-label cards, this product has experienced a resurgence due to emerging competition and innovative product developments.
Bouncing back from the decline in transaction volumes witnessed between 2018 and 2020, the private label credit card market in the U.S. made a significant comeback, recording growth in both 2021 and 2022. According to Freedonia Group, this growth is expected to continue until 2025. During this time, the total amount of money spent using private-label credit cards in the US is predicted to go up by 9.8%.
A white-label prepaid card offers businesses the opportunity to create loyalty programs, collect customer payment information, and design visually appealing brand-related materials.
White-label credit card programs simplify the process of establishing a customized payment system for businesses that may not be part of standard financial networks. These cards can come in physical or digital forms and can be accessed through a mobile app. While white-label debit cards are linked to bank accounts, other alternatives don't require this connection. Many companies opt for prepaid cards, onto which they can directly load funds. These cards are used for gift programs or to pay employees and contractors.
Prominent tech companies utilize prepaid cards powered by white-label solutions to offer services to their staff. Companies like Uber and Grubhub provide instant cashouts to their workers, contributing to the growth of the gig economy alongside traditional payroll roles.
Key players in the card payments industry. TOP 15 card issuers
The payments industry might seem complicated. We provide a simplified overview of the various participants in the payments value chain, especially concerning card payments.
The value chain of payments is typically comprised of five main parties:
Customer. Customers, also known as cardholders, are individuals who want to use their credit cards to make a payment for products or services.
Merchant. A merchant is a business that lets customers buy things or services with a credit or debit card.
Issuer. An issuing bank, also known as an issuer, is a bank that issues cards to customers, sets up credit or debit accounts for them, and handles their payments. Issuers are responsible for verifying transactions. They get details about a purchase from the acquiring bank and decide if it should be approved or declined.
Acquirer. An acquiring bank, also called an acquirer, is a bank or financial institution that helps merchants accept card payments. They gather the payment details and send them through the card network to the customer's bank for approval. Once they get the payment, the acquiring bank usually settles it in the merchant's account. This amount covers sales after taking out things like refunds, fees, and charges.
Card network. Every time a card is swiped, used with a chip-and-pin, tapped contactless, or used online, a card network comes into play. People often call this a card brand. Card networks make card transactions work, and in return, banks that help with payments (acquirers) and the ones that give out cards (issuers) pay a license fee, known as a card scheme fee. These networks share information and settle the money between the bank helping the seller and the bank that issued the card. They also set the rules for how banks should talk to each other (like using the ISO 8583 protocol) and decide the steps to solve problems, which makes things standard for everyone. Visa, MasterCard, American Express, and Discover together form what we call the card network.
As the payment industry continues to grow both online and offline, with various stakeholders introducing new and unique payment services, the payment process becomes more intricate. In reality, numerous intermediaries are involved in the payment journey from when a customer uses their card on a terminal to the point where the merchant's account is settled with funds.
Acquirer processors. Acquirer processors offer technological tools for exchanging authorization and settlement messages between the acquirer and card networks. They manage the technical aspects of the acquiring process and do not take on financial responsibility, leaving the liability and risk to the acquirer.
Payment service provider. A payment service provider (PSP) is a financial institution that links merchants to various acquirers and payment methods, such as credit cards, direct debit, and bank transfers. They also offer extra services like anti-fraud measures and foreign exchange settlements. PSPs give businesses the tools they need for smooth payment collection and management, including payment gateways, plugins, and anti-fraud systems. PSPs shine in simplifying the merchant onboarding process. They act as intermediaries for acquirers, making it easier for businesses to get started. Additionally, they provide a complete payment solution. This means a merchant only needs one account, yet they can access multiple payment options and streamline the process of keeping track of all the payments.
Payment gateway. A payment gateway is like a technical bridge. It gathers payment information from the customer's side and safely sends it to the right payment service provider (PSP) or acquirer. Many gateway providers also include extra services, such as fraud protection or smart routing.
Independent Sales Organization. An Independent Sales Organization (ISO), also known as a Merchant Service Provider (MSP), is a third-party sales organization that partners with acquiring banks, payment service providers, or payment processors. ISOs sell and promote credit and debit card services from these entities to merchants. Importantly, ISOs don't hold their own payment institution or acquire licenses.
Security providers. Payment security providers create and offer merchants technology to minimize risk during transactions, safeguard card payments, and protect against fraudulent activities. Typically, these security solutions rely on advanced tools like big data analytics and artificial intelligence.
The payment industry isn't simple if only a few players are involved. Apart from the above players, more are joining as the industry and tech change. It's a mixed-up industry with many middlemen who can have different roles at once. Like Adyen, they're a payment provider but also work as an acquirer processor, own a license, use a payment gateway, and even sell point-of-sale terminals.
The industry gets more tangled with companies buying other companies. Instead of making things from scratch, they buy to give clients more. In 2020, Visa got Payworks to make their tokenization better. Stripe got Touchtech to follow European rules for strong customer checks.
As of 2023, the realm of white-label card issuing showcases an array of providers offering a variety of services. Here, we present the leading 15 global white-label card issuers for your consideration:
Synchrony Financial, and its subsidiaries, is a US-based consumer financial services company. They provide various credit products including credit cards, commercial credit, and consumer installment loans. Their offerings also encompass private-label credit cards, co-brand cards, installment loans, and deposit products such as certificates of deposit and savings accounts. Synchrony caters to both retail and commercial customers and partners with various retailers, merchants, and healthcare providers. They offer debt cancellation products and healthcare payment solutions under different brands. The company's headquarters are located in Stamford, Connecticut, and they serve industries like digital, health, retail, automotive, jewelry, and more.
Chase is a prominent financial institution offering services to individuals, businesses, and institutions. They provide traditional banking, investment, and credit solutions, including savings and checking accounts, mortgages, loans, and diverse credit cards. Chase also offers investment and wealth management services, along with convenient online and mobile banking platforms. They provide various credit cards, both personal and business, each with distinct features, benefits, and rewards, suitable for a range of transactions and purchases.
Solarisbank provides a banking-as-a-service platform, allowing companies to offer banking and payment services under their brand. Their white-label solutions include card issuing and processing.
Stripe, a major player in the fintech space, provides a comprehensive platform for online payments. They offer white-label card issuing services that integrate seamlessly with their payment infrastructure.
Fiserv offers a wide range of financial technology solutions, including white-label card issuing services. They empower banks and credit unions to provide customized payment solutions to their customers.
Enfuce is a fintech company that offers a range of services in the payment and banking industry. Their offerings include white-label card issuing, payment processing, digital banking, open banking solutions, risk management, sustainability services, API services for integration, currency conversion, and regulatory compliance assistance. Enfuce's services empower businesses to optimize their financial operations, offer modern payment solutions, and ensure secure and compliant transactions.
Adyen is a global payments platform that not only provides payment processing but also offers white-label card issuing services. They enable businesses to create their own branded payment cards.
Bankable provides a banking-as-a-service platform that includes white-label card issuing. Their solutions cater to businesses aiming to offer payment cards as part of their services.
Marqeta is known for its modern card-issuing platform that empowers businesses to create and manage payment programs. Their flexible APIs allow customization, enabling businesses to offer a wide range of card-based solutions.
Brex offers corporate cards designed for startups and growing businesses. Their white-label card solutions help businesses manage expenses, rewards, and financial operations.
Fidor Solutions specializes in digital banking solutions, offering white-label card issuing and payment services for businesses looking to provide modern financial experiences to their customers.
Synctera focuses on bridging community banks and fintech companies. They offer white-label card issuing services that enable community banks to offer modern payment solutions.
MovoCash offers a digital payments platform with white-label card issuing capabilities. They focus on providing convenient and secure payment options to businesses and consumers.
Cuscal is an Australian payments company that offers white-label card issuing services to financial institutions and businesses. They provide end-to-end solutions for card-based payments.
Marble Financial focuses on credit-building solutions for underserved populations. They offer white-label card issuing services that help individuals improve their financial health.
How to choose a white-label card-issuing company?
Selecting a reliable card issuing company requires careful consideration to align with your business's unique needs. Here are vital factors to keep in mind:
Platform functionality. Examine the core functionalities of the card issuing platform, including card creation, activation, top-up options, funding mechanisms, and transaction tracking. Ensure it integrates seamlessly with your existing systems and can accommodate your future growth.
Security and fraud prevention. Security is paramount in card issuance due to handling sensitive cardholder data susceptible to fraud. Look for providers implementing robust security measures like data encryption, tokenization, and two-factor authentication to safeguard against unauthorized access.
Compliance and regulations. Verify that the provider adheres to industry standards such as PCI DSS. Research their compliance history and track record to ensure a reliable and reputable partner.
Fees and costs. Understand the fee structure, encompassing setup fees, transaction charges, and recurring costs. Compare the total cost of ownership with other providers to make an informed financial decision.
Reporting and analytics. Evaluate the reporting and analytics capabilities, assessing the depth and frequency of reporting provided. Comprehensive reporting can aid in program optimization and informed decision-making.
By considering these essential factors—technology platform, security, cardholder experience, fees, reporting, customer support, reputation, and compliance—you can confidently choose a card issuing provider that aligns with your business goals and requirements.
How much does it cost to start a card program?
A FinTech company has two ways of putting its own card program in place. It can either become a principal member of the Visa or Master card network or make use of white-label services and produce its credit card.
The first approach is not common across new fintech companies because the process of becoming a principal member is a tedious process involving meeting onerous regulatory requirements and incurring a host of expenses.
The second option is much easier. Neobanks and FinTechs can partner with BIN sponsors that have already been approved by Visa or Mastercard as scheme members and they can issue white-label cards on behalf of their clients.
There is no industry standard when it comes to the price of BIN sponsor services because sponsors deal with different types of clients across different markets and often provide additional services that add to the total price.
At Velmie, we partner with multiple vendors, ensuring our clients have a choice of BIN sponsorship companies that allow them to choose the one that is the best fit for their business. The table below gives you an idea of the costs you can expect but should be considered as a reference because they may well differ depending on the company and services you need to launch and maintain your own card program.
In addition to these costs, you will also be charged for card manufacturing and delivery services and these will be based on the quantity you require and where you are situated. The minimum order usually starts at 500 items.
What are the alternatives?
An increasingly popular alternative to cash and card payments is QR code technology but there is much debate about how this stacks up against other forms of alternative payments, particularly those that rely on Near Field Communication technology.
In the East, the biggest fintech companies, like Alipay, Wechat and PayTM, provide payment services using QR codes. In fact, QR codes are the second most popular means of payment in Asia after credit cards, with the total number of users expected to grow to over 2 billion by 2025, they are fast catching up with the major card scheme customer bases.
QR payments are also gaining popularity in Western countries, with leading neobanks, such as Chime, Revolut and Square (Block), allowing merchant payments and P2P transfers to take place via this technology.
Some of the disadvantages of using QR payment technology include the cost of setting up the infrastructure and ecosystem, with merchants needing to acquire POS systems that support QR codes. Security is also a concern. Paymentgenes identifies the following factors as the main disadvantages of using QR codes as a payment mechanism:
QR codes are vulnerable to phishing and hacking
Payments can only be made when there is a stable internet connection
The customer needs to come to grips with the technology
QR code payments are not regulated so there is little customer protection
However, the industry is finding that QR codes are well-suited to closed-loop systems that incorporate loyalty programs into their offering, for instance, coffee shops and retail outlets.
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