MARQETA Modern Credit Card Apps User Guide

MARQETA Modern Credit Card Apps

Introduction

They have been a central part of our daily spending habits since the 1950s, but credit cards have experienced little innovation over the last few decades. Here’s how it tends to work in today’s market:
Attracted by large sign-up bonuses and temporary eye-catching offers, new customers typically apply with their standard credit score. They wait patiently for their card to arrive a week or so later, and then start spending and accruing one-size-fits-all rewards. As a result of this approach, it’s not unusual for consumers with a decent credit history to own as many as three or even four cards. But for those whose credit score doesn’t meet the minimum standard, options can be limited to subprime providers and offerings that often come with high interest rates, fees, and low credit line limits.
It doesn’t have to be this way.
Imagine a credit card capable of delivering real-time and highly personalized rewards based on an individual user’s spending behavior, affinity, or geographic location. Or an end-to-end credit journey that lives entirely with the issuer or brand’s experience. What if you could use data to power the application process and offer lines of credit based on more than just a credit score? This is what a modern credit card is able to offer.

The three pillars of a modern credit card experience

Credit card issuers can see improved customer engagement and decreased attrition by understanding the three essential pillars of building a modern credit card experience.

Personalized
Virtually every part of the customer’s credit journey from rewards to payments can be tailored and personalized to segments or even individual cardholders.

Digital first
From onboarding to lifecycle marketing and engagement with the cardholder, modern credit cards are built for the digital and mobile-first consumer.

Intelligent
Modern credit programs can utilize data at the program, user, and transaction level to power custom and real-time decisioning and provide offers, budgeting recommendations, and more.

Personalized

Today’s credit cards are a mass market product. This is reflected in how they offer the same set of rewards and payment experiences to almost every one of their prospects. This truth often applies to co-branded cards too. Here the user experience is typically owned and managed by a co-brand vendor who is powering one-size-fits-all programs on behalf of multiple brands.
Contrast this approach with a modern credit card program, in which virtually every part of the customer experience can be personalized right down to individual cardholder level.
Meet Joe
Joe is a working professional that recently took up new exercising classes. Target rewards Extra cash back on health and wellness purchases.

A rewarding experience
With a strong focus on travel, grocery, and restaurant spending, rewards such as air miles or cash back have dominated the credit card industry for decades. Thanks to modern card issuing platforms, innovators are bringing to market new, sophisticated and targeted rewards propositions that are built around individual interests and can be modified when customer preferences or shopping behaviors change. For example, users can initiate their own rewards based on the way they shop, choosing a range of rewards categories aligned with their shopping needs each month. Because this technology is flexible enough to recognize each shopper’s uniqueness, offerings can be delivered with agility.

Other rewards possibilities include:

• Cryptocurrency and shares of stocks, which allow users to earn crypto or fractions of shares from each transaction
• Cause-based offers where donations are made to a consumer’s favorite charity that commits to a specific action such as planting a tree or recovering plastic
• Or behavioral incentives that offer bonus cash back to pay down debt or top up savings accounts

Limited interest

The antiquated way
For many cardholders, credit limits and APRs can remain unchanged even if their credit profile changes. This is because legacy cards rely on static models that are applied to all customers. This often results in customer attrition, with people switching between several cards to meet their spending needs. From a card program owner’s perspective, there’s a clear and present danger that their card will end up in the bottom of a wallet gathering dust.

The modern way
With a modern credit card, card program owners can keep an ongoing profile of a customer’s characteristics, right from moment of application onward. An example of this is the ability to automate recognition of a good repayment track record. Rules can be set on a modern platform that automatically lowers a user’s APR after they have successfully repaid their balance multiple times. The benefits to this top-of-wallet strategy are two-fold: first, the customer feels valued and this builds a greater sense of loyalty to the card program; second, the card program owner can gain a competitive edge and increase revenue from more frequent spending.

Balancing payments

The antiquated way
While text reminders and auto-pay are useful features in helping cardholders pay their credit card bills each month, the decision on how much to pay each month remains in the cardholder’s hands. This is usually based on guesses of how much a person can afford, rather than an intuitive estimate based on real spending insights.
The outcome is often a customer who gets stuck in chronic debt.

The modern way
If a cardholder is equipped with the right data and tools, they are able to make an optimal amount payment — that is, one that works with their budget and comes with the objective of quickly reducing any debt burden. With modern credit cards, forecasting functionality enables cardholders to see what interest they will have to pay over a period of time under different repayment scenarios. This empowers consumers to make informed decisions about balance carryovers. 

Taking control of credit with installments
In recent years, Buy Now, Pay Later (BNPL) propositions have brought an exciting new dimension to the world of credit. The concept is proving particularly attractive for larger-ticket purchases such as furniture and household appliances, or for life’s necessities among people who want to spread out payments and gain more control over their spending.
BNPL allows people to break a transaction down into a manageable installment plan. Individual transactions can be paid back over time rather than in a traditional 30-day billing cycle.
Modern credit cards are able to offer a hybrid solution, allowing people to opt for either monthly statements or a repayment plan.
Card program owners can give customers a real-time choice at the point of purchase of whether they wish to pay immediately or over time. Modern credit card solution Tymit is a case in point. Its customers can create a repayment plan that suits their circumstances, with 0% APR applied to purchases repaid within three months and varying rates for longer term plans. The U.K.- based company also doesn’t charge interest on an outstanding balance interest and allows users to adjust plans at any time.

C ard controls
Modern card programs can implement a range of control functions that best meet the program’s needs. Controls can be set to personalize where the card can be used, for how much, and when, and all of this can be done at the individual user level.
For example, a credit card provided by a parent to their teenager could be set to block online gambling transactions or have a spending limit applied. These controls can also be updated dynamically as cardholder profiles change or as a need arises.

Intelligent

Modern data analytics empower brands to understand their customers in ways previously unimaginable. This can result in more relevant offers and smart credit decisions that protect both the cardholder and the card program owner. Intelligent technology can also benefit consumers by informing better spending decisions, helping keep track of card activity in real time,
and linking up with helpful shopping opportunities at the right time and place.

Innovating in real-time

The antiquated way
It’s not easy for a legacy platform to iterate an existing credit card’s value proposition. Data tends to be housed across disparate systems, potentially stalling access to portfolio, account, and transaction insights that are essential to providing relevant offers and increasing engagement. And with outdated technology, making changes or launching new offers based on changing cardholder behavior can require months of custom development time — by then the new offer could be irrelevant.

The modern way
Modern card program owners are able to tap into real-time data, not only to inform new rewards, but also to present them at the most relevant time for a cardholder. By tracking a user’s spending patterns to identify purchase category trends, a card program is able to make targeted offers and recommendations. For instance, a card program could provide discounts or rewards for restaurants in a destination linked to a recent airline ticket purchase.

Decisions decisions
Most credit card issuers rely on traditional FICO scores to assess the creditworthiness of their applicants. And because many leading issuers operate on strict score cutoffs, some consumers — such as those who have yet to build or repair their credit history, or who may have recently arrived from another country — can be denied access to the market.
Modern credit cards draw on a wide range of alternative data to assess new applications. By combining underwriting with machine learning, it’s possible to incorporate data from bank accounts, such as cash flow and bill payment history, as well as employment information in the creditworthiness decision to reduce risk.
This opens up the credit market to more people who might otherwise have struggled to get a non subprime product. The outcome is safe approvals with more personalized credit limits and APRs, leading to a sustainable credit card program.

Transaction Intelligence

The antiquated way
Legacy card users can find it difficult to track and understand their spending. This is because card transaction metadata that comes through the card rails is often messy, making it difficult to understand where a user actually shopped. One example of this is when a holding company’s name appears on a credit card bill rather than the recognised retail brand. This can often lead to unnecessary disputes and operational costs if the user mistakenly believes there is fraud on their card.

The modern way
With modern credit cards, proprietary data enrichment enhances the metadata to provide a clear merchant profile. This sits alongside helpful spending insights and budgeting tools, empowering customers to make educated spending choices.

Digital-first

A credit card needs an app and it needs to live seamlessly within the bank’s or brand’s experience. Consumers now expect the ability to access critical functions such as applying for a card, making transactions online and off, setting up repayment plans, budgeting, and monitoring spending, in seconds. According to data from 4k consumers surveyed by Marqeta in April 2022, 75% said they have used a mobile wallet in the last 12 months, meaning COVID- driven digital payment adoption is likely here to stay. Here are some of the benefits of taking a digital-first approach.

Embedded convenience

The antiquated way
Applying for and using a legacy credit card usually involves a separate application and digital experience that lives completely outside of the brand’s current customer journey and operates in an entirely separate environment. The brand’s card quickly takes a bottom of wallet position because the user must move between two separate apps and make multiple clicks
to access insights on their rewards, transactions, and statements.

The modern way
Modern credit cards are purposely designed to offer a seamless journey embedded within the brand’s existing app experience. This begins the moment an application is started. End-to-end,
a modern card application process typically takes just a few minutes, with approval given instantly. And with open APIs and customizable SDKs, brands can build a credit card experience that sits alongside other financial or shopping services they already provide within their apps, creating the opportunity for stronger engagement, immersive brand centric experience, and cross-sell.

Goodbye plastic, hello virtual
From the moment a virtual card is approved, its details are presented to the user (meeting all PCI Compliance requirements) in the mobile app. This means the cardholder can begin spending immediately. The card can also be added to a digital wallet, such as Apple Pay, Google Pay, or Samsung Pay and be used for contactless payments in-store. The beauty of modern credit cards is that cardholders are engaged with the product from the moment they are approved. This is another example of an effective top-of-wallet strategy.
Modern credit card customers enjoy the convenience of pushing their virtual card details to merchants and wallets that participate in card-on-file tokenization and bill pay networks. This makes repeat spending straightforward and seamless for the end user. Additionally, customers are able to quickly suspend card details from merchants, digital wallets, and utility providers without having to visit a website to cancel services.

A useful hook

Legacy cards
Apart from text messages for repayment date reminders or new statement notice emails, users receive little in the way of truly helpful communication from their legacy credit card provider. To keep up-to-date with spending, customers usually have to log into a separate website for their card.

Modern cards
Everything is instant with a modern credit card. Webhook technology enables mobile notifications that deliver real-time transaction data along with account and chargeback status updates. A modern credit card mobile app opens with a single tap, providing full visibility of spending activity along with a range of other functions.

The three killer abilities of a modern credit card platform

Power to own the user experience
Highly configurable, APIs allow businesses to build, test, launch, and iterate a modern card value proposition on their terms — and more importantly, one designed around their target customers’ precise needs. It used to be the case that off-the-shelf platforms — with their tantalizing promise of requiring little or no development on the part of the card program owner — were the most efficient way to launch a credit card program. Unfortunately, such platforms offered limited control over the customer experience. That’s all changed now, thanks to the rise of open APIs.

Agility to enhance, pivot and grow in real-time
Both technology and customer expectations are evolving at a breakneck pace. To stand the best chance of staying ahead of the curve, modern card program owners need to be able to implement changes quickly, avoiding costly change requests. An open API platform delivers this capability in real time, providing reassurance to innovators that they will be able to introduce new functionality or change card parameters whenever required. Launching in new markets is often a case of replicating and tailoring an existing program, rather than starting from the ground up each time.

Ownership of the right components
Launching and managing a credit card program can be highly complex, with many moving parts. Deciding who manages which parts of the process is usually informed by a combination of business goals and an appraisal of existing in- house expertise. Some functions may be handled internally, while it may be more effective to outsource certain functions to a partner with proven capabilities. With a flexible, open API platform that is modular in nature, innovators are able to pick and choose the pieces they want to integrate. Card program owners can create an ecosystem of best-in-class experts working seamlessly together to provide the best possible modern cardholder experience.

How Marqeta is helping card programs to reinvent the credit experience

Marqeta’s credit card platform and integrated partners empower innovators to quickly and flexibly build modern credit experiences that can be designed for unique spending and rewards use cases.

Take back control
Marqeta enables business users and developers to build according to their specifications without having to submit a list of required program functionality and features to a legacy provider or wait months to make subsequent change requests following product launch. By putting card program owners in control through an intuitive dashboard experience and API technology, business visions are realized and the end user experiences a product that genuinely serves their needs. It also means programs can be easily modified and enhanced as customer bases grow and user profiles change.

Transform your existing credit card program
Have an existing credit card program or lending capabilities? Marqeta’s platform architecture enables you to integrate only what you need to launch or modernize your existing credit card program. Our natively built APIs and webhooks make it easy to connect into your existing workflows.

Industry leading partners to accelerate your launch
Marqeta’s modern digital technology is a trusted part of the global payments ecosystem. We are integrated with leading credit partners who bring specialized capabilities in underwriting and credit decisioning, mobile app design, customer service among other program management needs to accelerate the launch of your card program.

Our partnership with Deserve
Integrate to the all-in-one, digital-first Credit Card as a Service platform from Deserve, with Marqeta’s credit card issuing and processing technology built-in.

Our partnership with FNBO
From credit decisioning to customer service, combine the decades of co- brand program management experience of top bank issuer FNBO with the modern APIs of Marqeta.

About Marqeta

Marqeta is the modern card issuing platform empowering builders to bring the most innovative products to the world. Marqeta provides developers advanced infrastructure and tools for building highly configurable payment cards. With its open APIs, the Marqeta platform is designed for businesses who want to easily build tailored payment solutions to create best-in-class experiences and power new modes of money movement. Marqeta is headquartered in Oakland, California.
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References

• Marqeta | Modern Card Issuing and Payment Solutions

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