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How to Earn from Issuing Cards: A Guide for Businesses

Issuing cards can be a lucrative business venture for a variety of companies. But how exactly does it generate revenue? This article explores the financial aspects of card issuing, outlining the different ways businesses can earn money through this service and the associated costs.

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Card issuing feature in a financial application

Indirect Revenue and Cost Savings from Card Issuing

The primary motivation for many businesses to issue cards lies in the indirect revenue and cost savings it offers. The key lies in understanding how a payment card can benefit your customers or your own business. Here are some examples:

  • Banks: Payment cards are a core product that allows banks to earn from transactions, currency conversion, ATM withdrawals, and other fees.

  • Fintech wallets: Cards can increase revenue streams by offering banking functionalities.

  • Crypto wallets: Cards bridge the gap between crypto assets and traditional spending.

  • Insurance companies: Virtual cards with spending limits can provide immediate assistance to customers.

The possibilities are vast, and the specific use case determines the financial model's structure. You can potentially reduce operational costs or generate additional revenue streams by offering card issuing services.

Direct Card Issuing Revenues

Beyond indirect benefits, card issuing offers direct revenue streams as well. Here's a breakdown of the main sources:

  • Interchange Fees: Whenever a cardholder makes a purchase, the issuing company receives a fee from the merchant's bank. This fee varies based on factors like country, transaction type, and card product.

  • Currency Conversion Fees: Transactions in a currency different from the card's currency incur a conversion fee, typically ranging from 0.5% to 8%.

  • User Fees: Issuers may charge various user fees, including one-time issuance fees, monthly maintenance fees, and annual fees.

  • Transaction Fees: Depending on the card product and transaction type, additional fees like ATM withdrawal charges or per-transaction fees might apply.

Value-added services like insurance, VIP support, or concierge services can also be offered on top of the core card product, creating further revenue streams.

Direct Card Issuing Costs

Issuing cards comes with its own set of expenses. Here are some of the key cost factors:

  • One-time issuance fees cover production and initial operational costs.

  • Monthly fees per card include technical maintenance, regulatory compliance, and financial risk management.

  • Transaction fees: These are charged per transaction or based on transaction value to cover processing costs.

  • ATM service fees: Issuers incur fees for every ATM withdrawal, which are then passed on to the cardholder.

  • 3DS operations fees: Additional fees apply for 3D Secure authentication in e-commerce transactions.

  • Apple Pay fees: Apple charges fees for using Apple Pay, which vary depending on transaction volume and type.

  • Plastic card production and personalization costs include manufacturing, personalization, and delivery.

These fees are typically charged by card issuers and BIN sponsors to cover operational expenses, including:

  • Payment scheme fees: Fees paid to organizations like Mastercard or VISA for licensing and network access.

  • Payment processor fees: Companies like Verestro provide the technology for card issuing and charge fees for their services.

  • Card manufacturing and personalization costs: Companies like Austriacard or Thales handle physical card production and personalization.

  • Regulatory compliance costs: Obtaining payment licenses and adhering to regulations incur significant costs.

  • Security costs: Maintaining compliance with Payment Card Industry Data Security Standards (PCI DSS) requires ongoing security measures and audits.

While this article covers the most common revenue streams and costs, other factors can influence the financial picture.

How Verestro Can Help with Card Issuing

Card issuing presents a fantasic opportunity for businesses to generate revenue and streamline operations. By understanding the indirect and direct benefits, as well as the associated costs, you can make informed decisions about incorporating card issuing into your business model.

For more information on how Verestro can help you with your card issuing needs, visit our website and contact us.


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