Cross-border payments providers like Wise, Revolut and Verto have added card issuing to their offering in the last few years.
Traditionally setting up a card program has been expensive. However, with the recent emergence of banking-as-a-service, costs of both implementing and operating card programs have come down by an order of magnitude.
In this article I will first look at why all cross-border payment providers should offer cards. I will then describe how modern technology helps you implement a robust and scalable card program quickly and at low cost.
Why all cross-border payment providers should offer cards
The FinTech revolution of the last few years has reshaped customers’ expectations, both business customers and consumers. While in the past financial services providers sold financial products, now customers demand solutions.
Offering solutions means that financial service providers are expected to support entire use cases end to end. For businesses the use case may be treasury management for global SMEs or global expense management for businesses with a traveling workforce.
Businesses no longer just want to move money from one place to another. They want to move the money and then use it. Because more and more is paid on cards, from day-to-day expenses to software subscriptions, cards are an essential element in using money.
Many cross border payments providers will know about this already as their customers are increasingly asking them for cards. There are additional reasons to offer cards though.
Revenue is one of them. Card interchange revenue can be up to 2% of the gross payment value, often higher than FX revenue. With the right setup, FX revenue on cards is kept in-house.
Branding is another. Offering cards signals to customers that you are a modern provider with a great user experience.
Setting up a card program - the old way
While demand for cards has gone up, costs have come down dramatically over the last few years.
To set up a card program, cross-border payment providers used to have to set up their own card BIN in every country, integrate their core systems with a card processor for the processing of transactions and settlement of funds and implement customer support, card management, transaction monitoring and other card specific functions.
To solve the problem end to end, they would also have to implement expense management software and a mobile app for end-users.
Altogether implementing cards would cost a couple of million dollars and 18 months. It would then cost a similar amount again to operate the program each year.
Setting up a card program - the modern way
Competition in the banking-as-a-service (BaaS) market has drastically lowered prices to set up card programs in the last few years. In addition, merchant acquirers like Adyen and Stripe have entered the market with a different commercial model, allowing customers to set up a card program with zero setup fees.
No BaaS provider offers cards for every currency, but BaaS orchestrators like Yordex help cross-border payment providers offer a truly global proposition through a single integration.
These orchestrators also offer value added software including expense management, masspay and mobile apps and value added services such as customer support for cards.
Finally, BaaS orchestrators allow you to offer the right features at the right time in the right place. For example, credit, Google and Apple Pay, single-use virtual cards, multi-currency cards or an integration with your core systems may not be essential at launch but they may become more important later. BaaS orchestrators allow you to launch quickly and with the minimal required feature set and adjust when demand becomes clearer.
Conclusions
Customers just no longer want just financial products , they want solutions. Cross-border payment providers are impacted even more by this than banks.
Cards underpin a modern financial service user experience and all cross-border payment providers will have to offer them.
Instead of spending millions of dollars and 18 months to launch a card program that only works in one or a few countries and that you are not sure is right for your specific customer base, we recommend you take an agile approach: launch a global card program quickly, see how your customers use cards, adapt and scale the program over time.
To find out more about how Yordex can help you launch a card program the agile way, please contact us.
