<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/Artboard-1-copy-8-2-3.webp" alt="M2P Fintech" title="" width="100%" height="529">BNPL (Buy Now Pay Later) has become the talk of the payments industry for a good reason. It gives shoppers the ultimate convenience of instant credit access, zero interest rates, and hassle-free repayment options. Irrespective of the demography, BNPL provides a level shopping field for consumers across credit scores and purchase ability. It triggers consumer buying behavior by reducing the cost of purchase at the point of sale. Merchants and lenders gain significant competitive advantages when they deploy BNPL solutions. This inclusive consumer financing instrument helps merchants increase conversions, customer acquisitions, Average Order Value (AOV), and customer retention. Lenders benefit from optimal utilization of credit lines and the ability to build a scalable credit funnel while increasing revenue.<blockquote class="block-node" id="c39qhv3se">The Indian BNPL market size is expected to reach $ 56 billion by FY26 and accounts for 5 percent of digital P2M (Peer to Merchant) payments by FY26E, according to HDFC Securities.</blockquote><h2 class="heading-node" id="64ab" style="text-align: justify">Thriving Business Models</h2>The rise of consumer demand in the BNPL market has led lenders to rethink business models on a case-to-case basis. However, some of them are quite consistent in delivering profitability across lender profiles. Let’s check out the thriving business models that lenders use to drive the BNPL narrative forward.<h2 class="heading-node" id="a84f" style="text-align: justify">Card-based BNPL model</h2>Also known as post-purchase BNPL, the card-based BNPL allows lenders to offer no-cost EMIs to existing debit or credit cardholders after they purchase on merchant platforms. Banks, NBFCs, and fintechs can issue virtual cards for small-ticket purchases to consumers, which is acceptable with almost every merchant accepting card payments. Falling under the open network category, this model doesn’t require any prior agreement with merchants and lenders. Core considerations<ul class="list-node" id="ngcpo711t"><li>Only suited for banks that own a significant number of cards issued to their consumers.</li><li>This post-purchase BNPL solution doesn’t serve the purpose of increasing purchases and revenue for merchants.</li><li>Could cannibalize the bank’s credit card revenue when consumers with debit cards start deferring payments through post-purchase BNPL.</li><li>Doesn’t target new bank users, as it extends no-cost EMIs to existing cardholders.</li></ul><h2 class="heading-node" id="aad5" style="text-align: justify">Multi-lender platform model</h2>In this model, lenders can use BNPL payment options across merchants for their underwriting and risk management strategies. When consumers apply for instant credit for buying products or services across the merchant platform, the information is passed onto the cohort of lenders who access consumer risk profiles and choose to provide credit.For instance, if lender A declines the consumer, the same consumer profile is accessed by lender B and so on until that consumer is approved for credit. This model is the most consumer-friendly option as there is a high chance that one or more lenders will approve the credit. Examples of these providers include GreenSky, Divido, ChargeAfter, and Vyze, serving merchants like Abes of Maine, Wayfair, and Home Depot.Core caveats<ul class="list-node" id="55te5atgx"><li>Pits lenders against each other. Hence there is increased competition to issue credit and make profits.</li><li>Lenders won’t get control of the buyer journey and purchase behavior as the BNPL platform provider and merchant control the consumer data.</li><li>As multiple lenders are involved in the process, their brand recognition suffers.</li><li>The recollections and repayments cycle is managed by the BNPL platform provider, which makes them the primary point of contact for shoppers.</li></ul><h2 class="heading-node" id="0a01" style="text-align: justify">Embedded Checkout Model</h2>Embedding BNPL in the checkout page enables instant credit to consumers across merchant platforms. It also helps with personalization and consumer lifecycle management. In this model, lenders provide capital and underwriting facility to fund the embedded pay later option at the merchant’s checkout. The lenders enjoy an exclusive partnership with the merchant and can analyze shopper data to strengthen their decisions. They can tie up with a technology stack provider or build their own platform for issuing credit. One such example is the Amazon Pay Later backed by Capital Float and IDFC First Bank.Points to Ponder<ul class="list-node" id="o3urwdnon"><li>Lenders won’t enjoy brand recognition in this model as the merchant controls the entire customer journey.</li><li>Lenders need to align with merchants and tech stack providers to manage the risk and changes in the business strategy vis-à-vis rewards, promotion campaigns, etc.</li></ul><h2 class="heading-node" id="9cd5" style="text-align: justify">Self-enabled BNPL model</h2>Using this model, lenders can start their own BNPL platform and control the complete consumer loan cycle right from loan origination to credit line issuance, transaction management, repayment, and collection. This will provide them with the opportunity to integrate the Pay Later checkout option with preferred merchants. They can also have a dedicated interface to assist consumers with the entire BNPL lifecycle like transactions management, credit limit utilization, repayments, etc., through a dedicated application or by integrating this interface with the existing consumer application. Lenders can offer preferred customers with extended EMIs and rewards programs. Examples of this model include M2P’s BNPL stack for launching pay later programs for lenders.Key Benefits<ul class="list-node" id="fczisztz4"><li>Lenders have the option to manage the entire loan lifecycle and customize the platform for each consumer segment present across the merchant platform.</li><li>Based on the target consumer base and average ticket size, lenders can decide on the merchants they want to onboard on their platform.</li><li>Lenders get the option to own the complete consumer buying journey and increase brand recognition.</li><li>As the BNPL solution caters to people with low credit scores, making timely repayments gives lenders insights into further lending opportunities and builds consumer credit scores.</li></ul><a class="link au ns" href="https://m2pfintech.com/" target="_blank" rel="noopener ugc nofollow">M2P</a>&nbsp;enables banks, NBFCs, and fintechs to launch BNPL programs by leveraging its multi-module expertise and capability to manage onboarding, credit line issuance, lender management, collection, reporting, and reconciliation. Our full-stack Lender Management System helps lenders manage entire loan lifecycles across different merchants and platforms. Multiple use cases can be built as per the value chain requirements such as credit limit criteria, KYC, and multi-channel distribution such as physical/virtual card, UPI, wallets, NFC, and direct integrations with merchants, repayment options, and rewards/cashback, among many other data points. We help lenders go to market with one-click BNPL checkouts, card issuance, and seamless integrations at a 5x faster pace.Want to deploy the best BNPL solutions? Write to us at&nbsp;<a class="link au ns" href="mailto:business@m2pfintech.com" target="_blank" rel="noopener ugc nofollow">business@m2pfintech.com</a>&nbsp;and let’s get started.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox. Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Winning Business Models for BNPL Lenders

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/Artboard-1-copy-8-9.webp" alt="M2P Fintech" title="" width="100%" height="358">Did you know that your payment card could be your best brand ambassador?It doesn’t matter whether you are a business, Non-Banking Finance Company (NBFC), or a bank. You can issue prepaid cards, credit cards, and debit cards that will help drive brand loyalty and revenue.Wonder how?Simple. By customizing payment cards.<h2 class="heading-node" id="be40" style="text-align: justify">Why is payment card design important?</h2>Bland, run-of-the-mill cards lack soul. They do not call or speak to customers on a subconscious level and hence do not elicit usage.On the other hand, adding a personalized twist to cards enhances the emotional bond between the cardholder and the issuer. Card customization boosts customer acquisition, retention, transaction frequency, and value.Consumers worldwide prefer card issuers that deliver cool customized cards with family/pet portraits or pictures of their choice. But businesses and banks need to remember that whatever the design personalization may be, certain standardized elements need to be consistent across cards.<h2 class="heading-node" id="1bc2" style="text-align: justify">Design standardization parameters</h2>Here are some basic parameters that we need to adhere to while designing standard yet customized payment cards.<h3 class="heading-node" id="2149" style="text-align: justify">Card size requirements</h3>It goes without saying, card design starts with opening an empty artboard. And the next step is deciding the size of the payment card. Here are some standardized card dimensions.<ul class="list-node" id="gbcsqonb1"><li>Width and height of card: 85.60 mm x 53.98 mm (3.370 in × 2.125 in)</li><li>Radius of corners: 3.175 mm, in accordance with ISO/IEC 7810#ID-1 standard</li><li>Overall breathing space: 3 mm</li></ul>The size is all set!<h3 class="heading-node" id="aa47" style="text-align: justify">Types of design</h3>Payment card design can be classified into three types.· Abstract· Conceptual· Logo-basedAbstract — Creating a payment card with shape, form, color, and gestural marks.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/two.webp" alt="M2P Fintech" title="" id="ari13g4jx" width="100%" height="358">Conceptual&nbsp;— Designing based on a particular concept such as gift, meal, travel, teenagers usage, and so on.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/three.webp" alt="M2P Fintech" title="" id="iosfe6k87" width="100%" height="358">Logo-based&nbsp;— Here, the designer needs to stick to the bank or card network norms and design criteria. In these cases, the requirement comes with a standard design opportunity based on the client’s brand logo and color palette.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/one.webp" alt="M2P Fintech" title="" id="2ak8lsd0m" width="100%" height="358">Now, let’s check out key elements that need to be present in payment cards.<h2 class="heading-node" id="e02b" style="text-align: justify">Elements of a payment card</h2>Any credit, debit, or prepaid card contains certain components that are crucial to establish identity and security, and enable payment processing. Card issuers cannot compromise on these element placements at any point in time.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/Artboard-1-copy-9-5.webp" alt="M2P Fintech" title="" width="100%" height="358">Front side of a card&nbsp;<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/Artboard-1-copy-10-5.webp" alt="M2P Fintech" title="" width="100%" height="358">Backside of a card1. Issuing bank logo or nameThe issuing bank is the bank that provides network branded payment cards to the customers. The issuing bank follows stipulated norms for logo placement on the card and the norms vary from one card network to another.2. EMV chipThe tiny metal chip that looks like a sim card is called the EMV Chip. EMV (Europay, MasterCard, and Visa) is a global standard for credit and debit payment cards based on chip card technology.The EMV chip is a square metal chip placed on the front side of the payment card. It stores sensitive information and is a crucial security enabler. Hence no other element should be placed on the corresponding space at the back of the card. The cardholder should make sure that no damages are done to the chip as it contains a critical security code.3. Contactless iconThe Wi-Fi symbol or NFC symbol on the card’s front side is the contactless icon. This icon facilitates contactless payments without entering the Personal Identification Number (PIN) on Point Of Sale (POS) machines.4. Card network logoRuPay, Visa, and MasterCard are some of the popular card networks in India. They connect the issuing bank with the acquiring bank to facilitate online transactions. It is mandatory to place their logos on the card.5. Cardholder nameThe cardholder's name can be printed in two ways on the card. It could be embedded via embossed printing or indenting printing to provide a personalized touch and inlay feel. If the card is provided in an instant issuance process, then the cardholder's name cannot be displayed.6. Magnetic stripeThe grey magnetic stripe at the back of the card stores all the sensitive information. It can be read-only through a specialized card reader machine that receives payments. As per International Organization for Standardization (ISO) standards, the magnetic stripe should be placed only on the backside, in either the upper or lower position.7. Card numberThe most sensitive data on the payment card is the 14–19 digit card number. These unique series of digits help the cardholder make successful online purchases by identifying the account with the card-issuing bank. The card number can be on the backside if embedded via indenting printing, but for embossed printing, the card number should be placed only in the front.8. Card product typeEvery card has its product category name, like Platinum, Signature, Business, and Classic, to name a few. The card category can be printed on both the front and backside as per card network norms. Each category comprises specialized features and offerings that are defined by their issuing banks. This category name should be clearly printed on the card.9. Validity dateSome cards require both the issuing date and expiration date to be printed. And some contain only the expiry date. These dates help cardholders understand the validity duration of their cards. Banks track these dates and upon expiration, they send a new card to the cardholder's mailing address.10. Security codeSecurity code is also referred to as Card Verification Value (CVV), Card Identification (CID), Card Verification Code (CVC), or Card Security Code (CSC). The security code is included in the payment card to provide an additional layer of security for seamless online shopping. It is usually printed on the backside of the card and alongside the signature panel, based on the CVV type.11. HologramThe hologram proves that the card is authentic and not a duplicate one. Some of the card issuers place their holograms on the front side of the card.12. Signature panelThe signature panel comes into play whenever there is a suspicious transaction. It is usually placed on the back of the card. Businesses can always match the signature on the card with the actual signature of the cardholder to check authenticity. Every cardholder must sign on the signature panel.13. Bank detailsGenerally, the contact number of the issuing bank’s call center is included in the card. This number is intended to be of quick help if the card is not working or needs to be blocked. The issuing bank address is also displayed to help in case of a lost card, where the finder can deliver the card to the respective bank. The banks also include their terms and conditions on the card.Apart from the above-mentioned mandatory elements, card-issuing banks and businesses need their branding elements to present on the card. That’s when end customers will relate to and engage with the issuing business.So, personalizing is not just for end customers. In fact, it's more of vanity for them.&nbsp;But for card issuer banks and businesses, customization is critical.<h2 class="heading-node" id="bc67" style="text-align: justify">How we enable customized card issuance?</h2>Issuing visually attractive and customized payment cards are non-negotiable to gain consumer loyalty and brand recall. We at M2P understand how imperative it is for card issuing companies and banks to deliver innovatively designed, and customized payment cards.That’s why we co-create white-labeled and co-branded card issuance and personalization solutions for banks, NBFCs, and online businesses. Here’s how we help our client partners issue and manage customized payment cards for their customers.By fusing business requirements, customer expectations, and innovation, we deliver white-labeled and co-branded card designs that speak to the end customer. Our full-fledged, mobile-first, customizable API stack enables hassle-free onboarding and the <a class="link" href="https://m2pfintech.com/blog/know-your-customer-kyc-the-need-for-authentication/">Know Your Customer (KYC) process</a>. We also deliver limit configuration, inbuilt security and compliance, and end-to-end support from design to dispatch.We drastically expedite card issuance time and businesses can go to market with customized cards within days. Our cards are <a class="link" href="https://m2pfintech.com/blog/pci-dss-the-payments-armour/">PCI DSS</a>, ISO 27001, and AICPA SOC 2 compliant with centralized security updates, monitoring, patching, and remediation features. Our in-house token generation platform delivers network-branded tokenization solutions that manage the token life cycle.Leveraging our vast experience in issuing cards worldwide, we’ve put together a checklist you need to tick off before designing payment cards.Here you go.<h2 class="heading-node" id="4947" style="text-align: justify">Tick off the card design checklist</h2>✔️Fix the print-specific CYAN, MAGENTA, YELLOW, and KEY (CMYK) color model, to get the right colors on the card.✔️The position of the bank logo/name should be fixed as per the issuing bank’s choice.✔️Make sure that no elements are placed behind the EMV chip area.✔️Use Sans Serif font for card numbers, validity date, and cardholder name.✔️Standard size and alignment must be followed for hologram, magnetic stripe, card network logo, and EMV chip.✔️Stick to the type of design your client prefers, be it abstract, conceptual, or logo-based designs.The overall look of the card should be monitored and optimized keenly, without leaving any gap in the design front. But you can also have some fun and play around with the position and alignment of elements that are not expected to follow fixed norms. But ensure you are in line with the client’s requirements.The purpose of every card differs, that is why designers should bring out the right emotions through the right design.So, what are you waiting for?Go ahead and design customized payment cards for your customers.Need help? Want to know more about designing payment cards across card networks? Or need in-depth network-specific guidelines for design?Write to us at&nbsp;business@m2pfintech.com.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox. Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Payment cards design made simple: Here’s what you need to know?

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Artboard-1-copy-8-12.webp" alt="M2P Fintech" title="" width="100%" height="253">Three years into the pandemic, amidst the Omicron wave, the Indian Union Budget 2022 promises resiliency, growth momentum, and long-term sustainability measures. At a 9.2% GDP, India projected the highest growth rate among world economies. Great stat to start the budget highlights with right?<h2 class="heading-node" id="b7ef" style="text-align: left">Digital Focus</h2>The key focus areas of the budget were&nbsp;digital and technology for the next 25 years.&nbsp;The Finance Minister’s budget speech promoted digital and technological innovation across industries. It offered a sharp increase in public investment and capital expenditure provision that is expected to aid future growth and help businesses recover from the pandemic-induced slump.Initiatives focused on ‘accelerated growth’ for technology-led development, energy transition, and climate action while balancing the needs of an inclusive welfare society.<h2 class="heading-node" id="857d" style="text-align: left"><a class="link" href="https://m2pfintech.com/blog/fintech-101-discover-the-3ws-of-fintech/">Fintech</a> Impetus</h2>For the financial services industry, this budget promises greater investments, is fintech-friendly and <a class="link" href="https://m2pfintech.com/blog/fintech-a-catalyst-for-financial-inclusion/">pro-financial inclusion.</a>Honoring India’s 75th year of independence, the Finance Minister announced the establishment of 75 Digital Banking Units (DBUs) across 75 districts in India. This move is expected to extend <a class="link" href="https://m2pfintech.com/blog/fintech-a-catalyst-for-financial-inclusion/">financial inclusion</a> and fintech services to remote areas.Initiatives are also underway to make the <a class="link" href="https://m2pfintech.com/blog/ready-to-sneak-peek-into-global-cashless-societies/">cashless payments ecosystem</a> safe and seamless for consumers and businesses by enlarging digital infrastructure, boosting internet access, expanding touchpoints, and enhancing cybersecurity. The Finance Minister also stated that financial support for the digital payment ecosystem announced in the 2021–22 budget would continue in 2022–23.<h2 class="heading-node" id="3689" style="text-align: left">Other Highlights</h2>Budgetary Allocation<ul class="list-node" id="dss3o91dh"><li>6.4% fiscal deficit is projected for India in FY23</li><li>Revised fiscal deficit estimated at 6.9% of GDP</li><li>Rs 1 lakh crore as 50-year interest-free loans allocated to states to help fund PM Gati Shakti-related investments</li><li>Rs 10.68 lakh crore effective capital expenditure is expected in 2022–23, which is about 4.1% of GDP</li><li>35.4% rise in outlay for capital expenditure is estimated — from Rs 4.54 lakh crore earlier to Rs 7.50 lakh crore in 2022–23</li></ul>Venture Capital Investment<ul class="list-node" id="8tce85bkj"><li>Regulatory framework for Venture Capital to be reviewed by an expert committee</li></ul><a class="link" href="https://m2pfintech.com/blog/central-bank-digital-currency-cbdc-101-a-primer/">Digital Currency on Blockchain</a><ul class="list-node" id="zmbivw63m"><li>Reserve Bank of India (RBI) to introduce the digital rupee using blockchain in 2022–23</li></ul>Digital Banking<ul class="list-node" id="gygmtbnsd"><li>Launch of online bill system to reduce delays in payment for all central ministries</li><li>Credit growth increased by Rs 5.4 lakh crore this year, the highest in several years</li></ul>Crypto Tax<ul class="list-node" id="602bt55yq"><li>Cryptocurrencies and NFT will be taxed at 30%</li></ul>So, what do you think of the budget? Let us know in the comments below.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox.Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Key Highlights: What does Budget 2022 mean for Fintechs?

Secured Credit Cards 101 - Where Credit meets Saving

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Artboard-1-copy-8-9.webp" alt="M2P Fintech" title="" width="100%" height="284">Using <a class="link" href="https://m2pfintech.com/blog/prepaid-cards-101-a-definitive-guide-for-growth-and-profitability/">prepaid cards</a> is a great way to control business expenses, improve efficiencies and generate revenue streams. However, the time and effort involved in card issuance in-house are super crazy.If you want to hit the market with prepaid cards quickly within weeks, you need APIs.Yes, <a class="link" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/">Application Programming Interfaces (APIs).</a><h2 class="heading-node" id="2e39">Accelerates access and speed</h2>APIs speed up and democratize the card issuance and management process for businesses. Teams need not divert CAPEX or resources into building in-house prepaid card applications, compliance, partnerships, and support systems. Instead, an API call is all that it takes to create prepaid cards within weeks and onboard customers in a seamless manner.<a class="link" href="https://m2pfintech.com/blog/the-world-of-apis-how-they-power-fintech/">APIs</a> help customize onboarding and shopping experiences without diluting brand expectations and manage card usage and security. Though card networks like VISA, Mastercard, American Express, and Discover issue cards, <a class="link" href="https://m2pfintech.com/">API-providing fintech firms</a> are the ones that facilitate card access, operations, and management.<h2 class="heading-node" id="534d">Empowers diverse ecosystems</h2>It doesn’t matter whichever part of the globe you are operating from or whatever industry you belong to. APIs can be tailored to specific geographics, industry use cases, and needs.Fintech firms factor in diverse demographics, currencies, regulatory and compliance challenges, digital payment standards, and infrastructures before getting started with card issuance. They nullify entry barriers and provide opportunities for every business to gain from the benefits of prepaid cards. Customized APIs cater to multiple industries and serve multiple purposes such as payroll, gifting, <a class="link" href="https://m2pfintech.com/blog/cross-border-payments-a-swift-money-flow-across-borders/">cross-border payments</a>, intercity-transit, international travel, government benefit disbursal, insurance, health savings, and incentivizing employees.<h2 class="heading-node" id="dcfe">Delivers top-notch user experience</h2>The card issuing APIs take a human-first approach while aligning data, processes, and consumer platforms. They prioritize experience design and enable hyper-personalized card issuance in an instant.Both physical and <a class="link" href="https://m2pfintech.com/blog/all-you-need-to-know-about-virtual-cards/">virtual cards</a> can be customized and built for ultimate customer experience and personalized seamless transactions. As APIs prioritize security, businesses and end-consumers can be confident about not having to deal with data theft or loss of money. This drives greater customer experience, retention, and conversion.<h2 class="heading-node" id="2ff0">Stringent security management</h2>Strongly encrypted with stringent security controls in place, it is next to impossible to hack into the physical or virtual card ecosystems that APIs create. Right from enabling <a class="link" href="https://m2pfintech.com/blog/know-your-customer-kyc-the-need-for-authentication/">e-KYC</a> to countering processor breach, identity theft, to ‘friendly fraud’ (intentionally shared password) and false disputes, <a class="link" href="https://m2pfintech.com/blog/the-world-of-apis-how-they-power-fintech/">fintech APIs</a> can manage all without hassles.Program managers nip risks in the bud with strict red flag compliance, identity validation, and <a class="link" href="https://m2pfintech.com/blog/pci-dss-a-quick-guide-to-its-levels/">PCI DSS</a> compliance programs. Artificial intelligence modules identify fraud trends and track transactions to block vulnerabilities early in the lifecycle.So, in a nutshell, APIs can make it quick, easy, and secure for you to issue cards to your customers and employees. They also help businesses track and control expenses while improving customer experience and accessibility.But, hey wait. Don’t go yet.If you are at this part of the article. We understand you are looking to issue cards.And we have a pro tip for you!<h2 class="heading-node" id="506c">Pro Tip: Align business objectives, focus on core competencies</h2>Issuing <a class="link" href="https://m2pfintech.com/blog/prepaid-cards-101-a-definitive-guide-for-growth-and-profitability/">prepaid cards</a> can be done in-house or by partnering with a licensed fintech. Whichever direction you choose to move, remember to align business objectives with the card program. You also need to sort out legacy infrastructure issues, regulatory risks, fraud monitoring, compliance, and points of authorization. And if you are launching prepaid cards on a global scale, you’ll have to manage country-specific licenses, contracts, and integrations to keep the card program alive. So, before proceeding, remember to brainstorm about the time, effort, and resource allocation.Or you can just focus on your core competencies and leave card issuance, compliance, and program management to PPI licensed card issuance experts.Need help in issuing prepaid cards?Get in touch with us at&nbsp;<a class="link" href="mailto:business@m2pfintech.com">business@m2pfintech.com</a><a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox. Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Why should APIs be your holy grail for prepaid card issuance?

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/Artboard-1-copy-8-10.webp" alt="M2P Fintech" title="" width="100%" height="284">Entering card details every time you shop online can be such a tiresome experience. It often plays damp squib, dulling out the thrill of impulsive shopping. In fact, consumers cite this tedious process as one of the primary reasons for cart abandonment.<h2 class="heading-node" id="5e9f">COFT, the savior</h2>This is where ‘Card on File Transaction’ (COFT) emerges as a savior for both consumers and businesses. This functionality pops up on the customer screen, requesting explicit permission to save card details for subsequent payments.As the need to re-enter card detail is eliminated, COFT enables a seamless and convenient checkout process with lesser cart abandonments. It also boosts the chances of recurring impulse purchases.So, the next time you shop for your favorite shoe or that gourmet chocolate bar, you need not enter your card information. Instead, you only need to enter the CVV (the three digits in the magnetic strip) to pay for your purchase.Sounds amazing, isn’t it?We’re sure you can’t wait to understand the techno-functionality behind this incredible system.Here you go!First things first. We’ll cover what COFT actually is. And then, let’s delve into the latest RBI guideline and the mandate’s impact on the ecosystem players.<h2 class="heading-node" id="a695">What are Card On File Transactions?</h2>Card on File transactions are the stored card credentials available with a merchant, payment gateway or aggregator, or digital wallet. Used for future transactions, the card on file will store relevant details in encrypted format except for the CVV number. However, explicit consent from customers is necessary to store card details.The Card on File functionality is a two-stage process.<h3 class="heading-node" id="03af">First Stage</h3>Here the card details are entered for the first time on the website. After authorizing the transactions with two-factor authentication, the cardholder will be presented with an option to save card details for future purchases. If the cardholder opts in, the card details (except CVV) will be saved in an encrypted format.<h3 class="heading-node" id="18f1">Second Stage</h3>In this stage, the cardholder will just enter their card CVV number every time they initiate a transaction. There is no need to re-enter card details.<h2 class="heading-node" id="010c">How RBI’s latest mandate applies to Card on File Transactions?</h2>Reserve Bank of India’s latest mandate has extended the scope of <a class="link" href="https://m2pfintech.com/blog/how-does-payment-tokenization-work/">tokenization</a> to COF transactions. The circular released in January 2019 and August 2021 carried a device-based tokenization framework, and the same has been now extended to COF transactions as well.Meaning card issuers can also offer card tokenization services as Token Service Providers (TSPs), but they will require explicit consent from customers, including Additional Factor of Authentication (AFA). They will also have the control of tokenization and de-tokenization of the card data.Furthermore, the scope of tokenization has been extended to consumer devices such as laptops, desktops, wearables, Internet of Things (IoT) devices. The circular was issued to reinforce the safety and security of card transactions whilst not disrupting convenience.<h2 class="heading-node" id="a412">What is the impact of these latest guidelines on the ecosystem players?</h2>Subscription payments will be impacted as the new guideline requires explicit customer consent even five days before the recurring transaction. There is also a high chance that the customer may end up missing payment notifications and might miss or default on the payment. This guideline implementation must have been completed before 30th September 2021 by Banks.All merchants, banks, payment aggregators, <a class="link" href="https://m2pfintech.com/blog/what-is-a-payment-gateway-and-payment-switch-understanding-the-basics-of-payments-architecture/">payment gateways,</a> and NBFCs must make technical and protocol changes to their current recurring payment functionalities and Card on File data. This structural change will include a significant cost to the players as they must effect a strategic and operational change.With these new guidelines, the merchants will have to rely on the acquiring banks to address the concerns of customer complaints, chargebacks, and so on. Customers may choose to opt for different payment methods if they fail to experience a seamless shopping experience while initiating card transactions.<h2 class="heading-node" id="1529">Tokenization, the security booster</h2>With the introduction of these guidelines, the only remedy available to enhance security is tokenization. It can be used for one-time and recurring payments, thereby freeing merchants from the hassle of storing sensitive data.<h3 class="heading-node" id="e491">So, how does tokenization work?</h3>Tokenization replaces debit or credit card details with a unique set of characters or tokens that will process transactions without exposing the cardholder’s sensitive account details.Here is how tokenization happens.<ul class="list-node" id="decqr9ga3"><li>A credit/debit card is swiped at POS or on an e-commerce website</li><li>The card number will then be transferred to the tokenization protocol</li><li>The system will generate a random alphanumeric string, also known as “Token ”, to mask the original card number</li><li>The token will be routed to the merchant for further processing</li></ul>For example, card-carrying numbers 4781 2345 1235 3391 will be replaced as A2C0 9JUI 8S2F 7GKY when initiating a transaction.The safe and secured digital transaction is now possible with Tokenization!&nbsp;<a class="link au nl" href="https://m2pfintech.com/blog/how-does-payment-tokenization-work/" rel="noopener">Explore more.</a><h2 class="heading-node" id="cbcb">Conclusion</h2>Tokenization will protect card data from hackers as it is extremely hard to reverse the token to access the original card data.Now, there is a paramount need to develop and deploy solutions that satisfy both the cardholder and still be in check with RBI guidelines.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox. Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

RBI Guidelines on Card on File Transactions

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/04/banner-5.webp" alt="M2P Fintech" title="" width="100%" height="284">BNPL, the acronym for Buy Now Pay Later, though a relatively new concept, is slowly becoming the talk of the town. The new-age shopper is now drawn to BNPL products and is ditching the traditional payment options like Credit Cards. The article below explores the “why” of this paradigm shift.Starting from the ease of checkout to personalized offers, BNPL has masked the word and feeling of a “Loan.” It is simply viewed as Buy Now and Pay Later minus the paperwork and as a different IOU avatar. Along with the single-click checkout, BNPL also gets your merchant to bear the cost of No Cost EMIs. The<a class="link" href="https://m2pfintech.com/blog/factors-and-psychology-behind-the-great-bnpl-allure/"> factors and psychology behind the allure of BNPL</a> will sure make this the next big thing in consumer finance.<h2 class="heading-node" id="92eu7wjat">Are credit cards getting left behind?</h2>Traditional <a class="link" href="https://m2pfintech.com/blog/credit-card-processing-a-definitive-guide/">credit cards</a> were once a great choice for credit lines, but they are also perceived as a debt trap. Often, the lack of transparency and complex interest calculations attract heavy penalties and bad credit scores for the customer, leading to difficulties when securing a loan in the future.This is where BNPL holds a massive advantage over traditional credit cards. They offer a clear and transparent checkout option where the consumer is presented with all the factors of applicable charges and due dates upfront.Some BNPL players have even gone a step further and adopted time-tested <a class="link" href="https://m2pfintech.com/blog/six-profitable-bnpl-business-models-to-unlock-infinite-value/">business models</a> and have appended penalties for specific time frames. So, in the end, the new-age shopper not only gets flexible repayment options, but they are also empowered to understand financial nuances in case of late or missed repayment.<h2 class="heading-node" id="hlrx7eya9">BNPL in India</h2>After creating ripples in the US, Canada, Australia, and Europe, BNPL has now started its journey in the Indian <a class="link" href="https://m2pfintech.com/blog/fintech-a-catalyst-for-financial-inclusion/">fintech</a> ecosystem. And in a country where loans are generally frowned upon, BNPL has captivated customers with ease of payment, right at the checkout page.<h2 class="heading-node" id="njbjh0x7b">What is its premise ?</h2>Even though BNPL applications have adopted different means to facilitate checkout, they center around the issuance of “credit.” It also increases the shopper’s purchase power while completing the transaction with minimum hassle.Moreover, like Credit cards — BNPL applications are powering users for:<ol class="list-node" id="i38mltydk"><li>&nbsp;Consolidating many small expenses in one bill</li><li>Splitting a major expense in multiple repayments</li></ol><h2 class="heading-node" id="8i4r6mnzz">Let’s assess the BNPL options here in India!</h2>For example, Anuj has a list of standard expenses made at different e-commerce and hyperlocal players. He pays them all via a debit/credit card, which means entering card details, OTP, and finally paying the credit bill. With a single BNPL application where there is no need of OTP or card details, Anuj gets to shop without the hassle and gets to settle the bill through his preferred settlement option.So this option of BNPL has and offers the following features:<ul class="list-node" id="sd226xl5k"><li>Suited for small ticket sized purchases</li><li>Monthly or fortnightly settlement cycle</li><li>Single-click checkout</li><li>Late payment charges and penalties applicable on delayed repayments</li></ul>So, next comes the question of big ticket purchases:Let’s assume Anuj wants a new TV that is top of the line in the market and quite expensive. While using a credit card to make a purchase is a traditional method, BNPL offers a much easier way. The TV’s cost will be split into 4 EMIs, while the TV seller/merchant bears the EMI’s interest charge. So, in the end, the merchant gains a loyal customer, and Anuj gets a better way to manage his finance with manageable repayments.In this method, BNPL works this way:<ul class="list-node" id="ojf0e1333"><li>Suited for higher ticket sized purchases</li><li>Bill split into multiple EMIs as provided by the seller</li><li>Seller funded no-cost EMIs up to a time frame</li><li>Late payments penalties accrue if a due date is missed</li></ul><img src="https://miro.medium.com/max/1400/1*0IJebDapK8llqNbqHPZRig.png" alt="Features of Buy now pay later (BNPL)" title="" width="100%" height="227"><h2 class="heading-node" id="e9a4">Who are the users of BNPL?</h2><blockquote class="block-node" id="0m4ltzb7o">Millennials, Bridge Millenials and Generation Z, are the early adopters of BNPL.Source: Pymnts- Buy Now Pay Later Report-2020</blockquote>It is worthwhile noting that the youngest millennial is turning 25 this year, and he can be assumed not to be the ‘reckless spender.’Alternatively, cash transactions are in the lead, followed closely by debit and credit cards. However, with BNPL and digital wallets, this dynamic is slowly shifting, and it is an exciting wait to see who tops the chart. Many users who have never used or have limited exposure to credit cards rely on BNPL applications for credit needs.<img src="https://miro.medium.com/max/1400/1*PP1cOWo5J44sdLX1XpGnAQ.png" alt="Top reasons for using BNPL services" title="" width="100%" height="227"><h2 class="heading-node" id="7886">Well, now the fundamental question arises about the user without a good credit history.</h2><a class="link" href="https://m2pfintech.com/blog/how-can-lenders-overcome-challenges-in-deploying-bnpl-solutions/">BNPL lenders</a> give credit lines to shoppers based on secondary data. For example:· They analyze the data points like shopper’s history with the merchant<ul class="list-node" id="nmesbiiog"><li>· Average order size, time of association</li><li>· Order behavior like the number of prepaid, canceled, or COD orders.</li><li>· Order history and other available digital footprints of the shopper.</li></ul>Based on this data, <a class="link" href="https://m2pfintech.com/blog/winning-business-models-for-bnpl-lenders/">BNPL lending business models</a> enable credit to a user, and it gets enhanced as he/she makes timely repayments of the offered credit.<h2 class="heading-node" id="tpb0fu2ew">Connection between COVID and BNPL</h2>The ongoing pandemic has certainly accelerated BNPL adoption across the globe. With employees being laid off, being furloughed, and the uncertainty about their income, consumers are inclined towards budget-friendly payment options in which BNPL certainly takes the lead. Merchants are also more receptive to BNPL applications than they have ever been as it increases their consumers’ purchase power.<h2 class="heading-node" id="a0c0">How does the future look for BNPL?</h2>BNPL, in a decade, has taken the lead even though banks have been lending for hundreds of years. Today, banks are trying to keep up and switch to a digital-centric approach, such as providing their BNPL offerings and partnering with a Fintech to co-create solutions for consumers. BNPL, for banks, is an excellent medium for portfolio diversification.In India, BNPL has been scratching the surface, and it has a long way to go. Internet penetration has created the market where BNPL could fly in the coming years with FinTech’s, Banks, and Merchants’ necessary push.We can expect regulators also to fence BNPL offerings in the coming years. One thing is for sure, BNPL is here to stay, and it’ll keep on luring consumers. We are yet to watch its full potential and need to wait to see how BNPL shapes commerce in the future.To know more about BNPL, write to business@m2pfintech.com.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox. Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

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