Navigating the Compounding Complexity of Digital Card Issuing

By: Pierre Aurel, Chief Product Officer, Stanchion Payments Solution

The number of virtual cards issued worldwide is growing at an unprecedented pace. According to Juniper Research, global virtual card issuance is expected to grow at over 30% annually between 2023 and 2028, driven by relentless consumer demand for seamless, secure and convenient payment experiences.

Customers expect digital-first card products that work instantly in mobile wallets, faster online transactions and a list of different payment options. While the demand for digital card issuing accelerates, many banks face a daunting challenge: their existing systems and infrastructure are often stagnant or ill-prepared to meet the complexity and pace of modern payments innovation. Banks must deliver new features to meet the needs of their cardholders, but with several contending priorities such as blockchain-based cryptocurrencies, embedded payments and real-time payments, their efforts in modernising card issuing often fall behind.

A World of Constant Innovation: The Growing Pressure on Issuers

Every year, global and domestic card schemes introduce new features, innovations and compliance mandates. These are not just “nice-to-have” enhancements; they are increasingly required for banks to remain compliant, competitive and relevant in the digital payment landscape.

Consider Click to Pay, a global initiative led by Visa, Mastercard, American Express and Discover, which simplifies the online checkout process and increases security through tokenisation and secure authentication. Merchants worldwide are adopting Click to Pay to offer frictionless and secure eCommerce experiences, and banks must ensure their cardholders can participate – or risk being left out of growing segments of the digital economy. But Click to Pay is just one of many innovations that are rapidly reshaping the payment landscape.

Network tokenisation is now mandatory for many eCommerce transactions, requiring issuers to support secure, scheme-issued tokens that protect cardholder data.

SoftPOS or ‘Tap to Phone’ applications allow merchants to accept card payments directly on mobile devices – a growing trend that amplifies the use of contactless payments.

Dynamic Security Codes (CSC2/CVV2) and enhanced 3DS2 protocols offer advanced fraud protection but require issuers to adopt new technologies and integration models.

Instalment and Buy Now Pay Later (BNPL) offerings are increasingly embedded within card transactions, adding another layer of complexity.

Each of these features brings technical, operational and compliance challenges. Schemes issue regular mandates for adoption, often with short timelines. Banks that fail to implement these innovations risk exclusion from critical transaction flows, or worse, customer attrition as consumers shift to more modern, responsive providers.

Why Banks Struggle: The Legacy Systems Dilemma

For many banks, especially those with large, established customer bases, the core issue is traditional payment systems (nowadays considered legacy infrastructure). Most card-issuing platforms were built for a physical world, one where cards were embossed, mailed to customers, and only occasionally updated after expiration. These platforms were never designed to handle the dynamic nature of real-time card issuing, tokenisation, or API-driven digital wallet integrations.

As banks attempt to innovate, they face several uncomfortable realities:

• Complex integration with core banking systems.
• Vendors selling OEM card-issuing platforms often require long lead times and expensive customisations to enable even basic digital capabilities.
• Compliance with scheme mandates, including security and interoperability standards, adds additional time, cost and risk.
• Multiple disjointed projects (one for virtual cards, another for tokenisation, another for Click to Pay) result in fragmentation and operational complexity.

What often starts as a seemingly simple goal — “let’s issue a virtual card” — rapidly balloons into a multi-year, multi-million-dollar initiative with uncertain outcomes.

Domestic Schemes Add Another Layer of Urgency

In addition to global networks like Visa and Mastercard, regional and domestic schemes are rising to dominance in many markets. These schemes offer local alternatives that often have government backing and are integral to domestic payment flows and increasingly require digital card issuing capabilities.

Consider the rapid expansion of these schemes:

• Mada (Saudi Arabia): The national payment network driving over 70% of retail transactions, rapidly advancing in tokenisation and wallet integrations.
• Verve (Nigeria): Africa’s largest card network, integrated with global merchants and digital wallets, with over 40% annual growth in card usage.
• RuPay (India), Elo (Brazil), Troy (Turkey), Mir (Russia), Meeza (Egypt): Each requires unique integrations, compliance processes and feature support (like tokenisation and domestic wallet compatibility).
• Instant payment systems such as Swish, iDEAL, PayShap, Jaywan, are also pushing for integration of account-to-account and card capabilities under unified frameworks.

For banks operating in or entering these markets, supporting domestic schemes and wallets is essential – but managing these integrations on legacy platforms is nearly impossible to sustain.

Compounding Complexity in Action

What begins as a seemingly simple goal – tokenisation or scheme onboarding – it rapidly multiplies into a series of interdependent projects. The term IT sprawl comes to mind. For example, enabling one domestic scheme often means that the issuer now deals with at least two schemes, one domestic and another international. Some issuers are juggling relationship four or five schemes, each of which has different rules, goals and demands. Each additional tokenisation project brings unique APIs and security frameworks. Integrating these layers together requires more than just point solutions — it demands an orchestrated, scalable approach.

Unfortunately, many banks tackle this by creating custom software, but this introduces long-term risks:

• Knowledge dilution as key team members leave.
• Technical debt that grows with each new scheme or wallet.
• Fragility in adapting to new regulatory and scheme mandates.

Ultimately, the integration into each scheme is just a commoditised effort and none of this technical work allows the bank to differentiate itself from its competitors. The question is; should banks do this low level work or rather focus on delivering new innovation to its customers? Rather than spending valuable time on adding another scheme or wallet to the work list, banks should focus on leveraging their internal resources for innovation that set them apart in the market.

The Role of Payment Fabric: A Strategic Enabler for Modern Issuing

This is where the concept of a Payment Fabric becomes critical. A Payment Fabric is not another OEM-issuing system — it’s a modular, API-first layer that connects existing banking systems to payment schemes, wallets and digital issuance services.

A Payment Fabric enables banks to:

• Decouple core banking from innovation, avoiding costly core system replacements.
• Easily add new schemes, wallets and tokenisation providers through pre-built connectors.
• Adapt to future scheme mandates, security updates and feature roll-outs quickly and efficiently.
• Launch new card products; virtual, digital-first or plastic – all through flexible API-based issuance.
• Deliver seamless customer experiences that match or exceed fintech challengers.

Payment Fabric is a modular solution built to allow banks to integrate with existing systems, rather than a replacement for their entire stack. It provides longevity to existing systems without the cost and complexity of major platform upgrades, migrations or rip-and-replace.

Why Stanchion’s Payment Fabric is a Game-Changer for cards

Stanchion’s Payment Fabric is a leading solution in this space, offering banks a proven path to modern digital issuing without having to rip and replace their existing systems.

Key Features Include:

• Tokenisation: Pre-integrated with major schemes and wallet providers, enabling token provisioning, life-cycle management and security.
• Real-time, dynamic API issuing: Support for issuing virtual and physical cards, including dynamic card attributes, personalised controls, and spending limits.
• Scheme-agnostic design: Works with global networks (Visa, Mastercard, Amex) and domestic schemes (mada, eftpos, meeza etc).
• Support for new features: Built-in readiness for Click to Pay, Dynamic CVV2, and embedded features for mobile apps.
• Modular deployment: Banks can adopt only what they need, scaling as their strategy evolves — from simple tokenisation to full-featured digital issuing ecosystems.

Unlike traditional vendors locked into proprietary issuing stacks, Payment Fabric empowers banks to leapfrog competitors, especially those suffering from the fatigue of lengthy and costly transformation projects.

Pierre Aurel, Chief Product Officer at Stanchion, summarises it well:

“At Stanchion, we designed Payment Fabric to empower banks to stay ahead of the curve, not just catch up. This modular approach allows them to innovate without the need for a full-scale overhaul of their infrastructure. By meeting both customer expectations and evolving scheme mandates, banks can confidently navigate the complexities of the digital payment landscape.”

Leapfrogging Competitors: Turning Complexity into Advantage

In the fast-paced world of payments, banks that are slow to adapt to new technologies risk losing market share to more agile competitors, including fintech’s and digital-first banks. However, with the right approach, banks can turn this challenge into a competitive advantage. Making pragmatic technology decisions can unlock new value without the growth in operating costs. Payment Fabric is one of these critical decision points.

Payment Fabric empowers banks to:

• Launch new card products quickly, meeting customer demands and market needs without delay.
• Comply with current and future mandates without needing to revisit and rework existing systems.
• Offer seamless, frictionless customer experiences across channels and devices, closing the gap with agile fintech competitors.
• Leverage a growing catalogue of pre-built features that reduce operational complexity and costs.
• Leapfrog competitors stuck in legacy technology, gaining an edge in the competitive landscape.

With Payment Fabric, banks can innovate rapidly, ensuring they stay ahead of the curve while managing the complexities of the ever-evolving payments ecosystem.

Conclusion: Why Future-Proof Banks Need Payment Fabric Today

The future of card issuing is evolving at a rapid pace with fintech challengers rising. To stay ahead and retain customers, banks must embrace flexibility and agility – they cannot wait for their legacy platform providers to release a new version. Complexity is inevitable. Falling behind is not.

With Payment Fabric, banks can embrace complexity and turn it into a competitive advantage — ensuring they’re not just part of the digital payment future but leading it.