Legacy systems, although reliable in moving money, do not have the flexibility required to create truly differentiated payment solutions. The market was primed for disruption, and the advent of nimble fintechs over the past decade has now changed what it means to be a competitive payment solutions provider.
What do the most innovative disruptors in the payment card industry have in common? They all operate on a modern payment infrastructure. Consumers today are demanding things like more personalised payment cards, and issuers are finding that their once reliable legacy systems are holding them back.
Consumers have reacted positively to the emergence of innovations such as virtual cards and digital wallets, and are increasingly demanding products and services that fit their lifestyles.
Here we explore the numerous benefits these systems provide over their legacy counterparts, and the opportunities they present.
Benefits of modern card issuing
As opposed to legacy systems, which are built on convoluted architectures and follow a ‘one-size-fits-all’ approach, modern systems are developed on open API platforms. These enable card issuers to create customised payment card products with ease.
Besides, modern card issuing gives improved performance over legacy systems in three key areas:
- Time to market
1. Time to market
With legacy systems, new product launches are subject to lengthy development cycles. In addition, the resulting product is limited in how it can be redesigned for future requirements.
Modern systems enable a much faster time to market. Supported by an API-first approach, it allows for rapid prototyping and for incremental changes to be carried out quickly. What once took as long as a year can now be done in months or even weeks.
Card processing on legacy systems requires a set of rigid pre-defined processing rules to be determined. These rules can’t be altered against real-time data.
With modern card issuing, innovators gain full control over the payment flow, allowing for quick updates generated by actionable insights from real-time data.
Before modern card issuing emerged, it was often the case that payment providers would have to acquire local processors in order to extend their reach globally.
With a modern system, companies have the option to bring their payment solutions to multiple locations with ease. This is further supported by integration, via APIs, with major global and local card networks. Finally, the use of cloud computing reduces the need for additional capacity planning or re-implementation processes.
Opportunities of modern card issuing
Although reliable, legacy systems are not drivers of innovation and are unable to support businesses seeking to roll out truly differentiated card products.
Luckily, the emergence of modern, highly configurable systems has transformed the payment card landscape and redefined what is possible for card issuing companies.
Building a services ecosystem
One of the most significant opportunities presented by modern card issuing is the ability to develop a value added ecosystem around your core payment card products. The use of APIs to communicate with external systems opens up a wide range of collaboration and innovation opportunities. An example of this is CAARY, that is combining corporate cards with business insurance.
Transformed payment flows
Traditional payment flows followed a rigid journey from point-of-sale terminals to the issuer and back. With modern card issuing, card programmes can now respond to transactions in real-time, and can use metadata to create a more complete picture of the transaction. As a result, it is possible to allow applications to authorise transactions in real-time based on the unique criteria and data of the application.
Payments become invisible
With technological innovations and improvements in integrability comes a move towards ‘invisible’ payments (automatic transactions where the line between purchasing and paying is even more blurred).
This has been a growing trend in the payment card sector, with a notable example being Amazon Go and its “just walk out” shopping experience. Beyond this, there are emerging use cases in areas such as facial recognition payment gateways which make the purchase process invisible.
Test, launch & scale
In today’s competitive market, disruptors need to be able to bring their products to market in the fastest time possible. Fortunately, modern offerings have significantly reduced production times, and have enhanced the ability to make incremental changes and launch in new markets.
Using a private sandbox, it is possible to build, test, and launch cards quicker than ever before. Developers then have full control over card experience, and can analyse data and make configurations as needed. Card issuers which still rely on legacy systems can no longer keep up with the rapid pace of change – the time to upgrade is now.
Naturally, when selecting the best card issuing system for your business, there are a number of considerations to make: key functionalities, platform architecture, vendor experience, etc. To ensure the correct fit, we recommend mapping the current and future use cases for your business, and evaluating these against your vendor options.
Read on: Deep dive into Tuum’s cards module