Visa and MasterCard interchange reimbursement fees are the financial bedrock of the payments ecosystem. It typically equates to the largest expense paid by merchants when accepting credit cards. It’s revenue incentivizes the issuers to create cards and lure new cardholders to their institutions.
Companies like Cabela’s and major Airlines began issuing cards to serve as loyalty programs. Cabelas even became a top 15 issuer in the US because of the success of the program. These programs gave way to modern issuer processors like Marqueta whose platform enables virtually any company or brand to begin issuing credit and debit cards. Even with these modern issuing processors the average American carrying more than 4 credit and debit cards, there is still ample opportunity for card issuance.
The concept of embedded finance empowers platforms and financial technology companies to act as the liaison to banking services, including issuing. According to Accenture, only 4% of platforms have adopted this strategy or offer these services today. Banking as a Service and Open banking are creating a whole new market for credit and debit cards, servicing specific verticals as well as creating an entirely new source of revenue.