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White-Label Cards: Costs and Alternatives

Updated: Apr 27, 2022


For more than a century, payment cards have been a fixture in the banking world, enabling consumers to make cashless payments for goods and services. Now the dominant form of payment in the world, the earliest version of a credit card was the Charga-Plate, which looked like a dog tag and had customer details embossed on it.

The extent of the growth since the first card was created in 1920 has been staggering. Some three billion credit cards are now circulating the world payment system. The number of credit, debit and prepaid cards increased by two billion cards to 25.2 billion between 2019 and 2021, according to Statista and this number is expected to grow by 21% between 2021 and 2025 before levelling off. Visa alone processed some 190 billion transactions in 2020.

Over the past decade, the alternatives to credit card payments have multiplied to include other digital forms of payment that include digital vouchers and tokens enabling payment on mobile phones via SMS, Buy Now and Pay Later (BNPL) schemes, mobile wallets, contactless payments using Near Field Communication technology, QR codes and cryptocurrencies.

However, consumers still rely heavily on their credit cards to make payments, with Americans and Europeans on average owning as many as four cards. More than 90% of Americans have credit cards with a balance of $5,313 each. In the UK, nine in 10 adults have debit cards and six in 10 have credit cards.

With the four major networks processing $4 trillion credit transactions, it’s little wonder that fintech trailblazers in the payments industry still issue plastic cards when they go to market even though they have so many innovative digital payment alternatives to offer their clients.

In the face of competition from fintech disrupters, card schemes have significantly improved their offerings by introducing contactless payments, tokenisation services and new security measures. These steps put them in a stronger and more sustainable position to fend off the competition that comes from disruptive technology and alternative payment methods. Given the clear customer preferences for payment cards, credit and debit cards are thus unlikely to disappear anytime soon.

How much does it cost FinTechs to issue their own credit cards?

A FinTech company has two ways of putting its own card program in place. It can either become a principal member of the Visa or Master card network or make use of white-label services and produce its credit card.

The first approach is not common across new fintech companies because the process of becoming a principal member is a tedious process involving meeting onerous regulatory requirements and incurring a host of expenses.

The second option is much easier. Neobanks and FinTechs can partner with BIN sponsors that have already been approved by Visa or Mastercard as scheme members and they can issue white-label cards on behalf of their clients.

There is no industry standard when it comes to the price of BIN sponsor services because sponsors deal with different types of clients across different markets and often provide additional services that add to the total price.

At Velmie, we partner with multiple vendors, ensuring our clients have a choice of BIN sponsorship companies that allows them to choose the one that is the best fit for their business. The table below gives you an idea of the costs you can expect but should be considered as a reference because they may well differ depending on the company and services you need to launch and maintain your own card program.

In addition to these costs, you will also be charged for card manufacturing and delivery services and these will be based on the quantity you require and where you are situated. The minimum order usually starts at 500 items.

What are the alternatives?

An increasingly popular alternative to cash and card payments is QR code technology but there is much debate about how this stacks up against other forms of alternative payments, particularly those that rely on Near Field Communication technology.

In the East, the biggest fintech companies, like Alipay, Wechat and PayTM, provide payment services using QR codes. In fact, QR codes are the second most popular means of payment in Asia after credit cards and, with the total number of users expected to grow to over 2 billion by 2025, they are fast catching up with the major card scheme customer bases.

QR payments are also gaining popularity in Western countries, with leading neobanks, such as Chime, Revolut and Square (Block), allowing merchant payments and P2P transfers to take place via this technology.

Some of the disadvantages of using QR payments technology include the cost of setting up the infrastructure and ecosystem, with merchants needing to acquire POS systems that support QR codes. Security is also a concern. Paymentgenes identifies the following factors as the main disadvantages to using QR codes as a payment mechanism:

  • QR codes are vulnerable to phishing and hacking

  • Payments can only be made when there is a stable internet connection

  • The customer needs to come to grips with the technology

  • QR code payments are not regulated so there is little customer protection

However, the industry is finding that QR codes are well-suited to closed-loop systems that incorporate loyalty programs into their offering, for instance, coffee shops and retail outlets.

Other alternative payment methods that are gaining in popularity and are considered effective in serving niche markets include direct debits, Buy Now and Pay Later (BNPL) schemes and crypto wallets. However, other than crypto wallets, which show promise as a digital payment solution but remain a highly fragmented means of payment, these other alternatives are unlikely to process the huge volumes of transactions that payment cards have processed over the last century and mobile wallets, QR codes and cashless NFC devices may do over the next century.