So, you want to be a card issuer?

shopping business money pay

Card issuing seems to be hot right now. Despite the rise of alternatives to card payments, many Fintech’s appear intent on adding payment cards to their product portfolios. And it is not just the “me too” start-up banks.

For example, some international remittance services are adding payment cards to their offerings.  This allows customers to spend the money they receive directly but also means that customers do not withdraw funds immediately upon receipt. This extends the customer relationship adding value to both the customer and the Fintech.

A completely different example is that of online food ordering and delivery companies. In some cases these have become pre-paid card issuers.  Instead of their delivery agents purchasing the food with a card from a third party issuer who would charge for loading funds and who would get to hold any pre-paid funds, the food delivery companies themselves can manage the cards.  This can reduce their costs.  Additionally, they are able to join up their deliver systems with their back-end issuer systems to ensure that card transactions can only be performed at the location and for the amount that matches the delivery agent’s next order, thereby reducing fraud.

Adding card payments to Fintech services can be a great idea but it is not without its challenges.

To become a payment card issuer, a Fintech will, broadly speaking need three things:

  • A BIN sponsor: an organisation that is already a member of a card network to sponsor their participation in the network.
  • An issuer processor: to provide the back-end processing and card management for card payments.
  • A card perso (“personalisation”) bureau: to produce, personalise and send out cards.

Payment card processing is based on an industry standard called EMV. These standards ensure that when you wave a contactless payment card at a payment terminal, everything works providing the customer with the simplest user experience possible. Under the hood, however, EMV is anything but simple. There are hundreds of parameters to be configured and managed within the cards, with the potential to alter the behaviour and security of the payment application residing on the card.  It is possible for as single parameter set in error to make a card unusable.

Often fintechs rely on their perso bureau to make decisions about how these parameters are configured. The problem with this is that perso bureaus, for all their card expertise, are not experts in issuer processing and this can lead to cards being issued that do not work because the right questions have not been asked.  This situation can be further complicated as fintechs often do not have a direct relationship with the payment networks and so raise technical questions to their BIN sponsor or their issuer processor who may not be in a position to answer EMV perso and acceptance questions.

These issues create risk and inefficiency for all the parties involved and often leads to implementation delays – leaving the fintech paying for a production service, whilst the cards are not generating revenue for them yet. For a new start-up, dependent on cashflow, this risk can be very serious. Engaging the right expertise early, will ensure that errors and delays can be avoided, significantly mitigating such risks. 

Consult Hyperion has a long track record of working with EMV technology on the issuance and the acceptance side in detail and working with issuer processors on EMV card authorisation system initiatives.  We have used this expertise to support EMV card implementations, and this puts us in a unique position to support new EMV issuers to ensure that their implementations go smoothly.

Mondex Memories and CBDC

Mondex paraphernalia

Digital Identity Wallets are coming

I was delighted to be asked to present a keynote at the FIDO Authenticate Summit and chose to focus on digital identity governance, which is something of a hot topic at the moment. Little did I know that the day before my session was recorded the European Commission would propose a monumental change to eIDAS, the Europe Union’s digital identity framework – one of the main examples I was planning to refer to. I hastily skimmed the proposed new regulation before the recording but have since had the time to take a more detailed look.

How Could Digital Currency Work?

The Bank of England and the UK Treasury have announced a Central Bank Digital Currency (CBDC) Taskforce to coordinate the exploration of a potential British CBDC. But how could a digital Pound actually work? As it happens, this is something that Consult Hyperion knows rather a lot about. Apart from our work on the first British central bank digital currency (Mondex) back in the 1990s, our work on the first population-scale mobile money scheme (M-PESA) in the 2000s and our work on the most transformational contactless payment roll-out (Transport for London) in the 2010s, our practical experience across implementation platforms means that we understand the architectural options better than anyone.

Ultra wide band – the 2nd coming?

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Every year Consult Hyperion publishes our Live 5. We try to shine a lens on the year ahead and think about what will be impacting our clients. The themes for 2021 are:

Today I want to explore the topic of micro location from the point of view of (mostly) Apple ecosystem, and how developers can leverage application programming interfaces (APIs) to build useful apps. In order to understand that, first we should visit the topic of location in general – how do devices know where they are?

#IWD2021 – Cybersecurity really is a great place to work

photo of people reaching each other s hands

As an example of creative thinking in promoting inclusion, I would like to highlight John Patrick Crichton-Stuart, 3rd Marquess of Bute, a thoroughly modern Victorian, educated by his mother until the age of 12. He was ridiculed by society for his progressive views in paying great attention to the education of his daughters as well as his sons. Considered the richest man of his time, his hobby was building the finest fairy tale castles. He also built a magnificent building for the medical school at the University of St Andrews and endowed the Bute Chair of Medicine. When the male anatomy lecturer refused to teach women, he simply hired a woman as an additional lecturer, to teach any students who wished to learn with her. In this way, he managed to provide an environment in which women and men could train alongside one another, without coming into conflict with the existing hierarchy. Perhaps surprisingly, we still have lessons to learn from his approach.

Live 5 – Micro-Location

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In our Live 5 for 2021 we raised micro-location as an area of technology where we expect to start seeing significant advances being made.  UWB (Ultra Wideband) is just starting to get traction in consumer electronics and we believe that this will trigger innovation in micro-location technology.

Chip and PIN? Remember that?

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This weekend marks an anniversary. Although Consult Hyperion’s romance with smart cards had started many years before that, it will be fifteen years on Sunday that chip and PIN went live in the UK. I remember St. Valentine’s Day 2006 as if it was yesterday!

Merchant Payments Ecosystem 2021

When we look forward to 2021, it is no surprise that COVID-19 is the dominant factor. So far as the merchant payments world is concerned, the shape of the post-pandemic new normal transaction environment must be the key strategic consideration for stakeholders and I am desperately keen to hear the variety of informed opinion on this topic that I have come to expect at Merchant Payments Ecosystem every year. At Consult Hyperion we like to contribute to these conversations by providing a useful framework for discussion: our annual “Live 5”, our yearly set of suggestions for strategic focus. This year, we choose to look at the key issue of pandemic transformation and its impact of on the three key domains where our clients operate: Payment, Identity and Transit, together with (as is traditional!) a suggestion as to a technology that the POS world may not be thinking about but probably should be.


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