Research from Aite Group in its latest report, Instant Gratification: The Case for Instant Card Issuance in the United States, shows that while there are more than 570 million active credit and debit cards in US cardholder pockets, average card life is shrinking, and top-of-wallet positions are threatened by the rapidly rising tide of data breaches.
Financial Institutions (FIs) want to drive for longer card life and higher usage, and they therefore require ways to entice new cardholders, such as instant card issuance.
During the last six months, large data breaches and the coming wave of EMV card conversions have piqued FIs’ interest in instant card-issuance solutions. Instant card issuance is all about enabling cardholders to walk out of a bank branch with an activated payment card ready for making purchases. Instant card-issuance solution providers claim they can trigger immediate and increased card use, a scheme that, if true, will gather FI acceptance and investment. Opportunities that drive a payment card to the top of the wallet and allay consumer fears when sudden adversity hits are attractive.
Instant issuance solutions are not cheap; Aite Group’s analysis shows instant-issued cards are more than twice the cost of bulk-produced cards, so producing all cards through the instant card-issuance process is not practical for the majority of FIs. Therefore, Aite Group believes instant card-issuance solutions should not be justified based on cost alone. Solutions should instead be constructed to fit within the overall service goals for an organization.
FIs with large branch networks and payment card portfolios should deploy instant card-issuance solutions to improve the customer experience and increase card activation and purchase volume. In addition, to maximize value, instant card-issuing solutions should be coupled with marketing initiatives that compel a cardholder to immediately make a purchase.
“Findings indicate instant card-issuance solutions can be advantageous due to interchange revenue and purchase volume lifts in addition to being effective in compromised-card incidents, enabling expedited card replacement for distraught cardholders,” says Madeline Aufseeser, senior analyst in Retail Banking at Aite Group.
“Nevertheless, instant card-issuance solutions are a complex bundle of services with specific security needs that require an FI’s thorough investigation to determine the best strategic partnership, deployment model, and implementation strategy.”