Co-branded Card Issuance
Experience Design
In the first part of this series, we discussed the rationale behind co-branded cards and what it takes for banks to design such a program. Now, let’s delve into the card management life-cycle and its various stages/components.
Card Lifecycle Steps
Once the card program is approved, the next step is to design the enrollment experience for customers. This journey involves four major steps: Enrollment, Usage, Management, and Settlement.
Enrollment
At this stage, the brand needs to create the signup and onboarding experience for potential cardholders. This includes the application process, Know Your Customer (KYC) verification, and card activation. Key considerations include:
Card Application
– Who is eligible to apply for the card? Is it open for everyone, or are specific customers targeted?
– What information is required from the applicant? Is it the same for everyone, or does it vary?
– Will there be an application fee? If so, how much, and how will it be collected?
– How can users apply—via mobile app, web app, or offline?
– How can users track their application status?
– Can applications be declined? Under what conditions, and how will this be communicated?
– For businesses, is a bulk application process needed, and how will it work?
KYC
– Why is KYC necessary?
– Who needs to undergo KYC—the business, the cardholder, or both?
– What KYC modes are available, and how do they work? What is the validity period for each mode?
– How do users complete their KYC?
– What are the turnaround times and costs for different KYC modes? Are there security concerns?
– How is KYC status communicated to the user?
– When can a KYC request be rejected, and what happens if it is?
Card Activation
– How do users activate their cards once received?
– Is activation done through the product or elsewhere (e.g., ATM)?
– How do we verify that the right user is activating the card?
– How do we ensure the correct card is activated?
– Who sets the PIN—preset or user-defined?
– How is the user notified of card activation?
Usage
After activation, cardholders can start using their cards. Key considerations for designing the usage experience include:
Card Transactions
– Are transactions allowed on all channels (ATM, POS, Online)? What are the interchange earning considerations?
– Are there spending limits—daily, weekly, monthly?
– Are there limits on certain merchants or merchant categories?
– Who sets and checks these limits, and what is checked at the time of authorization?
– How are transactions authorized? Is it done by the bank or remotely by the brand? What are the success rates and transaction times?
– How does the brand get confirmation of transaction completion?
– Are user accounts pre-funded or just-in-time funded?
– How are transaction failures and retries handled?
– What options for second-factor authentication are available (e.g., OTP, PIN, Device Pattern)?
– How is the user notified about the transaction status?
Statements
– Who maintains the statements for each holder?
– Are APIs available to access statements on request?
– What search and filter capabilities exist?
– What file formats are supported for statement download? Is password protection necessary?
– How does a user raise a dispute or chargeback? Is support provided on or off the product?
– How are chargebacks communicated to the bank? Are APIs available?
– How is the chargeback resolved and the status notified to both the brand and cardholder?
– Who updates the cardholder’s account balance after a successful chargeback, and when is the user notified?
Management
Cardholders should have DIY functionalities for tasks like blocking the card or resetting the PIN. Key considerations include:
– Which profile updates are compliant with current regulations? Are phone and email updates allowed?
– How do we validate the cardholder’s identity before operations?
– How do we verify new details provided by the cardholder?
– What options are available if the cardholder loses app access?
– How do we differentiate transactions made by a blocked card from a newly issued one?
– Does requesting a new card require a new application and KYC process?
– Is there a fee for issuing a new card? If so, how much?
Settlement
Managing settlements between various parties involved in the issuance and transaction processing is crucial. These include:
– Network Settlement: Sponsor banks settle the network for transactions authorized during the day, typically on a daily basis.
– Issuer Settlement: The brand works with the sponsor bank to determine settlement details. Key considerations include delayed settlements and account replenishment before thresholds are breached.
– Interchange Settlement: The brand and the bank decide on the timing and method for raising and paying interchange invoices.
– Third-party Settlement: The brand negotiates settlement terms with third parties involved.
– Credit Repayment: If there’s a credit provider, repayment terms need to be discussed, including late fees and interest settlements.
This outlines the main stages and considerations of the co-branded card management life-cycle, providing a comprehensive guide to the essential aspects of the process.