Card issuing: Types of issued cards and how they work

Prepaid cards allow you to provide customers with secure and efficient payment solutions. As a financial business, if you are offering prepaid cards, you can acquire a huge customer base. Prepaid cards enhance your customers' satisfaction by making payments more convenient. 

Moreover, prepaid card solutions enable faster, affordable, and transparent transactions for your customers. Your customers can send money anytime and anywhere using these cards. By issuing the right cards, you can unlock new revenue streams and strengthen customer loyalty.

This guide explains the different types of cards you can issue and the key factors to consider when choosing a solution.

Let’s get started with the basics.

What are prepaid cards?

Prepaid cards are payment cards that are preloaded with funds. Your customers can link their cards with their bank accounts or deposit money in them by transferring money to their cards. Your customers can use them for purchases, online transactions, and international remittances.

These cards provide financial flexibility. They help your customers manage expenses while ensuring security. Moreover, you can issue prepaid cards for payroll, government benefits, and travel purposes.

Types of cards you can issue and how they work

Prepaid cards have many types. You can issue different types of cards to your customers based on their requirements. Let’s see their types and how they work.

Prepaid cards

Prepaid cards can be of two types: open-loop and closed-loop cards. Open-loop cards allow your customers to use them anywhere for any merchant. Whereas, closed-loop cards are designed for specific purposes, such as gift cards, store cards, and transit payments.

How they work

Your customers can load money into their cards for making any transactions. Money will be deducted from the available balance. Once the balance reaches zero, customers must reload funds to continue using the card. 

Virtual cards

Virtual cards are entirely present in digital form. They work like physical cards but are used for online transactions. Also, virtual prepaid cards reduce the production of physical cards. At the same time, protect your customers' sensitive information.

How they work

Your customers will receive virtual cards with unique details linked to their accounts. They enter the card details during online transactions. The card protects the primary account information by generating temporary card details. Once the transaction is complete, some virtual cards expire automatically, which reduces the risk of fraud.

Business cards

Business cards come in handy for companies to manage their expenses efficiently. They allow their employees to make purchases while keeping track of spending. This way, the companies can track their employees' card usage.

How they work

The customers can set limits and monitor transactions in real time. They can use this card as long as there is a balance in their account. Once the balance finishes on the card, either they have to reload it, or the card might be for single-use purposes.

Debit cards

Debit cards link directly to your customer’s bank account. Every transaction deducts funds from the available balance. These cards are widely used for everyday purchases. They offer convenience and security, which makes them a preferred choice for personal and business use.

How they work

When a customer makes a purchase, the amount is immediately deducted from their linked bank account. Your customers can withdraw cash from ATMs and use it. Also, they can also transfer funds through debit cards. Debit cards require PIN authentication for security and often come with fraud protection features.

Credit cards

Credit cards allow your customers to borrow money up to a set limit. They can pay back the amount, often with interest. Furthermore, your customers can enjoy benefits such as cashback, rewards, and purchase protection. As banks and financial institutions, you can generate revenue through interest charges and transaction fees.

How they work

A credit limit is set for the customers based on their profile. Customers can make purchases using the card, and the bank covers the cost temporarily. Your customers have to repay the money borrowed by the due date to avoid interest charges. If the payment is delayed, interest accumulates based on the outstanding balance.

Key factors to consider when issuing cards

When you are choosing a prepaid card management system, you should consider the following points:

Compliance and regulations

You need to comply with anti-money laundering (AML) and know-your-customer (KYC) rules. Meeting these requirements ensures security and prevents financial crimes.

Security features

Security is a top priority when issuing cards. You must provide features like EMV chips, tokenization, and two-factor authentication. Also, strong security measures protect customers from fraud and unauthorized transactions.

Customization and scalability

Your cards should meet different customer needs. Offering branded cards with customized features improves your customers' user experience. On the other hand, scalability is crucial, which allows you to expand your services as demand grows.

Integration with prepaid card management software

A robust card management system enhances efficiency. It allows you to track transactions, monitor usage, and manage card issuance seamlessly. Integration with advanced software improves operational efficiency and customer satisfaction.

How card issuing benefits banks and financial institutions

Prepaid cards are one of the most preferred ways of payment by your customers. Let’s see how they can benefit your business:

Increased revenue streams

Card issuing generates multiple revenue streams. You earn through transaction fees, interchange fees, and interest charges. Offering premium features also brings in additional income.

Enhanced customer experience

Customers prefer secure and convenient payment solutions. That’s why you should issue different types of cards. It also ensures they find an option that suits their needs. A seamless card experience builds trust and strengthens customer relationships.

Seamless international transactions

Issuing international cards to your customers may boost your business opportunities. Your customers can make payments globally without currency exchange hassles. Hence, partnering with international networks enhances your card’s usability and acceptance worldwide.

Stronger customer loyalty and retention

Providing innovative card solutions increases customer loyalty. Features like cashback, rewards, and low transaction fees attract long-term users. A well-designed card program keeps customers engaged and reduces churn rates.

Conclusion

If you want to stay ahead in the digital payments space, card issuing is your gateway. It helps you offer secure, customizable, and globally accepted payment options to your customers. Whether it’s prepaid, debit, credit, or corporate expense cards, each type adds value to your offerings. But success depends on how well you manage compliance, security, and scalability. 

That’s where a robust card issuing solution makes all the difference. With the right technology partner, you can streamline operations, gain real-time insights, and deliver a seamless user experience. Don’t wait. Take the next step to launch your card program and unlock new revenue opportunities today.