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The Siren Song of Credit Card-as-a-Service: In Search of a Breakthrough Opportunity in the US Market

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24 May 2023
Zilvinas Bareisis

Abstract

The promise of Credit Card-as-a-Service (CCaaS) to democratize credit card issuing has attracted investment and resulted in a busy landscape of contenders hoping to capture the opportunity. The hype and excitement, somewhat dampened recently by a few setbacks, may yet prove to be justified as the players continue to enhance their capabilities and look for untapped market demand.

Card-as-a-Service (CaaS) enabled non-banks to issue prepaid or debit cards to their customer base. Credit Card-as-a-Service is an extension of CaaS. Yet, it is a more complex proposition requiring a combination of deep credit expertise, sophisticated technology, a balance sheet or access to capital markets to fund the card receivables, and program management know-how to bring it all together. We go deep into unpacking the CCaaS capabilities stack in this report.

There are many contenders aiming to capture the CCaaS opportunity, and a dedicated chapter in this report paints the busy landscape. However, nobody has a full stack of capabilities. At a minimum, partnerships are required between banks and technology providers, such as scale or next-gen processors. In reality, most technology players also need to partner with each other to deliver a full stack of capabilities.

The scope of this report is focused on the US market, particularly for the provider landscape and assessment of the opportunity. Having said that, parts of the report, such as the capabilities stack discussion, are relevant to our global audience.

We expect the next few years to be critical in developing and capturing the opportunity. Given the uncertain macroeconomic climate, it may not feel like the right time to pursue opportunities in credit cards, but it is a good time to be developing a strategy for growth and investing in technology upgrades.

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