News & Views - Savantor

The Changing Issuer Landscape

Monday, 05 November 2007

Issuers need to look ahead to the imminent use of contactless and not too distant use of NFC and have suitable governance in place to regularly review their strategies to take best advantage of these new technologies.  Impact on back office processes needs to be considered as this can be overlooked in the rush to catch the next wave of technology, and there are several on the starting blocks.  In addition to contactless/NFC and the allied migration to DDA, there are also trials taking place of Instant Issuance and the introduction of multi application cards with more than one form of payment on the card e.g. combining debit and credit.

Any issuer considering joining the contactless card issuance programme in the UK needs to understand clearly how such a move fits as part of an overall strategy particularly in relation to authorisations.  Prior to any such move it makes sense to review existing authorisations strategies to reduce reject rates and improve risk management.  Many such strategies, particularly chip settings on Issuer Action Codes, LCOL and UCOL etc were put in place several years ago and may not have been revised since. This is probably resulting in many transactions being declined for no good reason with a consequent loss of revenue for issuers.

All of these initiatives have considerable impact on systems, infrastructure, PIN management, key management, personalisation etc and are all likely to be introduced in the UK over the next 18 – 24 months so the time is ripe for the correct strategies to be put in place to maximise return on investment.  As new players move into the payments market with no legacy systems to maintain the need for traditional card issuers to look at how to manage applications rather than cards has never been clearer.  Issuers with ageing in-house card management systems are particularly at risk as these systems are unlikely to be able to cope with keeping track of cards with a mix of debit, credit, loans, contactless, 2FA, loyalty applications never mind the challenge of keeping track of these if they are resident on a mobile phone.

Issuers who do not have a clear strategic view of how to handle these changes will find it increasingly difficult to maintain and increase market share.  As W.E. Deming once said 'survival is not compulsory'

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