How to Evaluate a Card Issuing Partner

September 2, 2022

Matt Morrison

Growth Manager

The card issuing partner you choose for your card program can have a big impact on your go-to-market timelines, product roadmap, economics, and customer experience.

The right card issuing partner will work with you to structure your program, meet your launch milestones, and manage the daily operations needed to run a successful program. But it can be hard to find a great long-term partner.

The two common reasons why companies have a hard time evaluating providers:

1. They don’t know what to look for in a card issuing partner
2. They’re putting too much weight on features and not enough on flexibility and support

This guide will help you evaluate card issuing providers and the characteristics to look for in a long-term partner.

Key takeaways

• There are two common types of card issuing partners used by fintechs: issuer processors and Banking-as-a-Service providers.
• Issuer processors are the interface to the card networks and orchestrate the millions of daily transaction messages. A BaaS vendor boxes up the services of an issuer processor, issuing bank, and other banking features in one package.
• When evaluating a card issuing provider look at factors like the strength of their relationships with the banks and card networks, how much support they provide, and the degree of customization the provider can offer you.
• Some card partners can help you quickly launch a product into the market but can’t scale with you as your needs evolve. Look for providers that can stay with you for the long haul instead of risking re-evaluations and migrations.

What is a card issuing partner?

Card issuing partners help companies build, launch, and run their own card programs. There are two common types of card issuing partners:

• Issuer processors
• Banking-as-a-Service providers

Issuer processors have direct connections with the card networks. They authorize or decline transactions and handle clearing and settlement. They’re the interface to the card networks and orchestrate the millions of transactions that happen on a daily basis. Issuer processors can also provide card fulfillment through card manufacturers partners, as well as handle the processing of cardholder disputes. This includes modern companies like Lithic and Marqeta, as well as legacy providers like FIS and Fiserv.

Banking-as-a-Service providers integrate program management and issuer processing. As the program manager, they own the sponsor bank relationship and act as middleware between companies and banks. Most BaaS providers only offer basic card issuing services. Companies in this bucket include Treasury Prime and Unit, which rely on Marqeta and Visa DPS for issuer processing.

Common challenges with card issuing partners

Whether you choose an issuer processor or a BaaS provider, you should be aware of the red flags to look out for:

• Lack of important functionality
• Features that don’t work as described
• Inflexible platform that can’t be customized to your use case
• Unexpected changes to the timeline or missed due dates
• Inability to keep up with your pace of development
• Issues with the underlying sponsor bank or card network
• Taking shortcuts on compliance and legal
• Not treating your business like a priority or non-existent support

Some of these challenges become obvious only in hindsight. For this reason, we recommend reference calls with existing customers, reading case studies, and asking investors and peers what it’s like to work with them.

How to evaluate a card issuing partner

Deciding on the right card issuing partner for you depends on a number of factors, including your company stage, use case, industry, desired functionality, and whether or not you want to manage your own program.

For example, a company offering a card in the fleet/trucking space may care a lot about level 2 and level 3 payment data. A company looking to offer a debit card to students will need a provider and bank comfortable issuing cards to minors. A larger company that wants to manage their own card program may limit their search to processor-only providers.

Here are 13 factors you can use to evaluate a card issuing partner, along with some sample questions to help you gather the right information.

1. Product Usability / APIs

Try to get a sense of what it’s like to build before you commit. Ask your developers to look through the provider’s API documentation and explore their sandbox. Some companies have proof-of-concept (POC) solutions so you can build an MVP or pilot a program for little or no cost.

Some questions to consider:

• Is the provider’s technology easy to work with?
• Can you try it before you buy it?
• Do your engineers like working with it?
• Can you easily integrate with other tools?
• Do they offer any software development kits? If so, in what language(s)?

2. Use Case

Don’t make any assumptions that a provider can support your use case. Cards programs vary widely and just because a website says it’s possible doesn’t mean it’ll work the way you need it to. Walk through your use case operating expectations to ensure you and the card issuing partner are on the same page.

You’ll also need to confirm that their banking partner can support your use case. Some questions to consider:

• Do they have previous experience launching this type of product?
• Will their bank partner have a problem with this use case?
• Can you speak to any customers that have recently launched their program?

3. Program Flexibility

Some providers only offer managed programs, meaning they only support card programs where they act as the interface to the underlying sponsor bank. If your product doesn’t fit into the program manager and sponsor bank’s pre-approved construct, you might not be able to launch your product.

To get a better idea of program flexibility, ask the provider questions about the sharing of responsibilities and whether any aspects are negotiable.

Some questions to consider:

• Do you want a program manager or a processor-only relationship? Can they do either?
• What types of BINs do they support?
• What kind of card controls do they offer?

4. Features and Functionality

Some financial technology terms mean very different things at different companies. Get granular when talking about functionality and ask specific, technical questions. Some questions to consider:

• Can they provide L2 and L3 transaction data?
• How granular is the reporting? For example, can they offer detailed settlement and interchange reporting?
• Can they fund cards in real-time?

5. Product Flexibility

Can you bring your own vendors and third-party tools? Some questions to consider:

• Can you bring your own transaction monitoring tools?
• Can you bring your own loan management system?

6. Networks

Card networks offer different features and functionality. Some questions to consider:

• What card networks do they support?
• Which payment controls do they support on each network?

7. Bank Partner

Evaluate the flexibility of a provider’s issuing bank to support certain use cases and their willingness to support novel products. Some questions to consider:

• Do they have a good relationship with their bank?
• If you need to move your program to a new bank, what is the migration process?

8. Card Types

Ask the provider about supported card types like debit, credit, and/or prepaid cards. Some questions to consider:

• Have they been shipping physical cards on time?
• What timeline do they support for receiving these customized products?

9. Implementation support

Most providers offer implementation support, but this can mean very different things at different companies. Some questions to consider:

• Will you have your own implementation manager?
• What responsibilities is the partner handling?

10. Post-implementation support

A good long-term partner should provide you with:

• A dedicated customer success manager
• Access to subject matter experts

11. Pricing Models

Ask about the gross versus net share on interchange revenue and whether there are platform fees or volume minimums. Questions to consider:

• How do they structure pricing?
• How will their pricing change as your program scales?

12. Product roadmap

Evaluate the momentum of the card partner’s company and what it’s building toward. Questions to consider:

• Are they still updating their products and releasing new features?

13. Customers

Do they have any referenceable customers you can speak to? This might seem obvious, but it’s a huge red flag if a provider doesn’t have any customers to note or doesn’t want you to talk to any of their customers.

What makes a good long-term card issuing partner?

• They treat your business like a priority.
• Be flexible and make it easy to integrate with other tools.
• Provide clear, proactive communication.
• Have reliable relationships with issuing banks and card networks.