A wide range of non-banking service providers are beginning to embed payments into their suite of offerings making them an invaluable part of an elegant, customer-first digital experience. For example, popular social sharing sites are a great example of a digital platform where "billions of intents” - the need for a home, car, travel - are broadcast by customers. In a customer's buying cycle - the trigger, discovery, and consideration - happens here. These micro-moments provide opportunities to blend payment products with customers’ life needs and improve lifetime value.
For issuers, at a time of declining interchange fees, slimming market share due to increasing adoption of real-time payment rails — the demand for broader integrated services has paved the way to remain competitive by remodelling core card products and capturing new revenue streams. Instant virtual cards can help issuers build new value ecosystems, seek new markets, and address heightened customer expectations for immersive payment experiences. And the opportunity is significant. Juniper Research forecasts that the global value of virtual card transactions will reach US$6.8 trillion in 2026, from US$1.9 trillion in 2021. Payments industry consultancy Mercator Advisory Group anticipates that virtual card use will outpace physical business credit card use by 2024.
Virtual cards essentially function in the same manner as a physical prepaid or a debit card, minus the plastic. They are, emerging as the preferred form of payment because these cards can be provisioned and activated on-demand to facilitate secure online, in-app or mobile payments. The rules that govern virtual cards can be quickly programmed, giving issuers complete flexibility to customize products aligned to specific business needs. Virtual cards, for instance, can be generated to settle a specific vendor transaction -- locked down to a specified amount, and time limit -- or as a general-purpose card. Payments outside of these parameters are simply not authorised, seamlessly protecting buyers from fraudulent transactions without impacting the user experience.
An API-first framework provides issuers the flexibility to tap into adjacent ecosystems and embed payments into an almost unlimited number of consumer and corporate applications. To attract digital-first consumers, new age banks and companies are embedding virtual cards into smart devices to provide e-commerce, mobile and point-of-sale payments. YAP Middle East, the leading digital banking platform in the MEA region, for instance, combines virtual cards with added value capabilities such as intuitive card controls, bill payments and spend tracking. Singapore’s Grab, which began as a ride-hailing service like Uber, for instance, has embedded payment services and its own wallet into its app.
Another example is the pairing of lending options with virtual card issuance capabilities. India’s largest consumer finance company is leveraging FSS Unified Issuance Platform to offer virtual cards with a BNPL option to drive revenue and cement customer loyalty. Consumers can apply for these cards online or receive instant EMI cards at checkout (online and physical point of sale) to fund purchases.
Issuers can also explore new business segments that offer higher margins such as corporates. According to Juniper Research a typical company makes more than 2,000 domestic payments annually. Workforce spend management solutions could equip procurement teams with virtual cards with built-in transaction limits and spend tracking capabilities to prevent misuse. Likewise, in a gig economy, businesses can use virtual cards to provide earned wage access to its contract workers.
For issuers, opening issuance APIs to third party apps represents a step-change in their current business models. By industrializing capabilities and offering Cards-As-a-Service, issuers can model an expansive services marketplace. This is the case with ICICI, India’s leading private bank which provisions an instant virtual card with its wallet app to enable customers access a range of services. Likewise, Emrys France which issues multi-wallet virtual cards. Customers can use the open-loop wallet, resident on the card, to transact at merchant outlets affiliated to the Emrys network or at non-affiliated stores. For purchases made within the Emrys affiliate network, customers receive points that are credited to their loyalty wallet at a defined frequency.
Issuers can also participate in third party ecosystems and embed core payment card capabilities at the optimum point of acquisition, at a lower cost and a higher conversion rate. Vopy Payments, for instance, has partnered with FSS to launch embedded financial services to serve telecom providers, social network platforms, consumer tech and other business verticals across multiple markets in Europe.
Embedded payments demand that issuers modernise card platforms to develop new services and products with speed and flexibility. FSS Unified Issuance Platform -- an API-driven, cloud capable platform - provides critical issuance infrastructure to help customers quickly launch digital products from the ground up. The platform APIs allow issuers to orchestrate a complementary services ecosystem as well as embed card payments into third party ecosystems including Google Pay and Apple Pay. Additionally, the platform supports value-added capabilities such as real-time risk decisioning and insights into cardholder spend patterns.
