Co-branded Card Issuance, Explained — II
Part II — Experience Design
In part I of this series, we talked about why co-branded cards make sense and what does it take for banks to design a co-branded card program. In the current story, we look at the card management life-cycle and its different stages/ components.
Once the card program is approved, the brand now needs to design the experience for the customers to enroll for the program and get started with the next steps. The entire customer journey can be mapped into 4 major steps: Enrollment, Usage, Management & Settlement.
Enrollment
At this stage, brand needs to design the signup and on-boarding experience for the prospective card holder. This step includes card application, user KYC and card activation. The primary considerations in each of these aspects include the following.
Card Application
- Who can apply for the card? Is it open for all or do we whitelist specific customers?
- What all info do we need from the applicant? Is the information required same for all users or does it change on a case to case basis?
- Do we charge an application fee for the program? Why? How much? When and how does the user pay this fee?
- How does the user apply? Mobile app, web app, offline?
- How does the user track application status?
- Can the application be declined? In what all cases? How do we communicate that to the user?
- If it’s a business, is bulk application required? How does that work?
KYC
- Why do we need to do KYC?
- Who do we do KYC for? The business or the card holder or both?
- What are the KYC modes available? How does each mode work? What’s the time validity for each mode?
- How do the users complete their KYC?
- What are the turn around times for different modes? What is the expected cost per KYC? What are the security concerns here?
- How do we communicate the KYC status back to the user?
- When can a KYC request be rejected? What happens when the KYC request is rejected?
Card Activation
- How do the users activate their cards once they have received them?
- Does card application happen on the product? Or off the product (ATM?)
- How do we validate that the right user is activating the card?
- How do we validate that the right card is being activated?
- Who sets the pin? Is it preset or does the user decide his/her own pin?
- How do we notify the user of card activation?
Usage
After the card is activated, the cardholder can start using it for spends. The primary considerations in designing card usage experience includes the following.
Card Transactions
- Do we allow transactions on all channels? ATM, POS & Online? Interchange earning considerations here.
- Are there any velocity limits on spends? Daily, weekly, monthly?
- Are there any merchant / merchant category limits?
- Who sets and who checks for these limits? Who checks the card status & KYC status at the time of authorization?
- How are transactions authorized? Is authorization at bank’s end or does the brand do remote authorization? What are the success rates and transaction completion times for these options like? More here.
- How does the brand get a callback confirmation for transaction completion?
- Is user account pre-funded or is it just-in-time (JIT) funding?
- How are transaction failure & retry cases handled?
- What are the possible options available for 2nd factor authentication? OTP, PIN, Device Pattern?
- How is the user notified of the transaction status?
Statement
- Who maintains the statement for each holders?
- Are APIs available to access statements on request?
- What are the search and filter capabilities on the statement?
- What file formats should be supported for statement download? Password protection?
Chargebacks & Reversals?
- How does a user raise a dispute/ chargeback? Do we provide chargeback support on the product or off the product? What are the downsides of both?
- How does the brand communicate the chargebacks to the bank? Are there APIs available?
- How resolves the chargeback? What are the turnaround times?
- How is the chargeback resolution status notified to the brand?
- How is the chargeback resolution status notified to the cardholder?
- Who updated the account balance of the cardholder in cases of successful chargeback and when? How is cardholder notified of the same?
Management
Cardholder needs to be offered DIY functionalities for basic operations like blocking the card or resetting the card PIN. Some of the key considerations while designing this leg of the experience includes:
- What updates to cardholder profile are complaint as per current regulation? Is phone number and email update allowed?
- How do we validate the identity of the card holder before any of these operations?
- How do we verify new details being shared by the cardholder?
- What are the options for the cardholder to perform these actions if app access is lost?
- In case a card is blocked and new card is issued to the same user, how do we need to separate out transaction done by the two cards?
- Does new card request require application & KYC all over again?
- Do we charge for new card issuance? How much?
Settlement
Since there are multiple parties involved in the entire issuance & transaction processing, there needs to be settlements between these parties. Some of these settlements and subsequent recons include:
- Network Settlement: Sponsor bank settling the network for the amount of transactions authorized during the day. This mostly happens on a daily basis.
- Issuer Settlement: Brand needs to work with the sponsor bank and figure out details of they need to settle the bank before or after network settlement. Key considerations here include the ones with regards to delayed settlements & account replenishment before threshold is breached.
- Interchange Settlement: Brand and the bank needs to decide when and how the interchange is invoice is raised & paid.
- 3rd party Settlement: The brand needs to work with 3rd parties to negotiate on settlement terms — how much and when to pay each 3rd party involved.
- Credit Repayment: If there’s a credit provider involved in the program, repayment terms need to be discussed. Repayment and late fee/interest settlement needs to be done accordingly.
Reach out to me if you would like to discuss further on this topic. I am at bits.ankit@gmail.com | https://www.linkedin.com/in/a4ankit/ .
