A definitive guide to understanding API banking

Our chapters on Core banking APIs & Lending APIs, would have given you a glimpse of the vast possibilities possible through banking APIs. It isn’t over yet. In this chapter, we are going to cover another popular set of APIs - Card Issuance APIs.

Card Issuance APIs are used to create, manage, & distribute your own virtual (digitally generated - scroll down for a detailed explanation) or physical credit or debit cards. These are ultimately cards issued by popular card networks - VISA, Mastercard, American Express or Discover. These players have card issuing partners across the globe, like banks, fintech organizations or credit unions. The issuing partners create & issues cards while the card networks process payments between banks & merchants.

Card Issuance APIs have made it easier for their customers to create physical & virtual cards instantly. They can even brand these cards the way they want to.

Customized cards for businesses

Many card issuing companies like banks or fintech institutions have APIs that let businesses create their own customized credit & debit cards. Payments company Stripe & neobank for SMEs Open (hey, that’s us!) are examples of companies that provide this solution to their B2B customers.

The APIs enable businesses to create and manage both physical and virtual cards via an API call. This lowers barriers to entry and accelerates the time taken for businesses to issue their own cards.

Virtual cards are digitally generated debit or credit cards that have all the properties a physical card has. You can create & dispose of as many virtual cards as you want. These cards are used to manage multiple teams by allotting them different virtual cards with the unique card number, CVV, and an expiry date.

There are a few use cases of customized cards that need to be highlighted here. For example, creating & assigning company cards for expense management. All these cards have banking services integrated into the debit cards, and hence can be used to do banking activities.

Another example would be, with the help of Card Issuance APIs, it is possible to issue cards for on-demand delivery. For example, for their fleet of couriers, an on-demand delivery company can issue a specific card that can be used only at the assigned merchant.

Most of the companies out there in the market use Card Issuance APIs for expense management. Now let’s look at how here at Open one would find a solution for the same.

Imagine you're a small business owner who’s looking to automate managing your employee expenses. You can make use of Open's Card Issuance APIs. With these APIs, you can create both physical and virtual cards for managing your team's expenses. Each of these cards can be assigned to your team members and can be programmed with custom or flexible spend limits. Needless to say, it will be configured according to your company policies.

Sounds exciting? That’s because it is.

Making online transactions safer with virtual cards

Recently, there has been an explosion in the usage of virtual cards by businesses. By 2024, it's predicted that globally, the virtual card market will balloon to $500 billion.

What are virtual cards though? And what exactly is causing this surge?

A virtual card is a prepaid debit or credit card that comes with all the features as that of a physical debit or credit card. They are strongly encrypted on a users’ phone, allowing the user to never worry about losing the physical card. Most of the businesses use virtual cards to increase the efficiency of their expense management system. These cards are also becoming popular for one-time purchases and disbursements like issuing a card just for a specific purchase or subscription renewals.

These cards are linked to the user’s main credit or debit card account similar to that of physical cards. However, they minimize the personally identifiable information the user shares at the place of purchase.

Virtual cards have many benefits for both business & their suppliers. Some of them are -

    1. The biggest benefit with virtual cards is the privacy you get and the protection it provides against fraud.
    2. Since it isn't physical, virtual cards are never handed over to anyone and there are no magnetic strips or chips that can be cloned by the thief.
    3. Vendors or suppliers instead of writing cheques, can use virtual cards to make payments to reduce the chance for human errors of fraud.
    4. One of the main benefits is the ability to close virtual cards anytime. Cancelling a card otherwise means a new card has to be issued, which might lead to a cascading chain of problems.
    5. You can also set spending limits & even assign specific cards for merchants.

As if Card Issuance APIs weren’t disruptive enough there is another set of APIs that have driven innovation in the fintech space. You might want to use them too. So, why don’t you now check out our next chapter on the Acquiring APIs?