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A guide to credit card processing - What should banks look for in a credit card processing solution?

December 7, 2020

A guide to credit card processing - What should banks look for in a credit card processing solution?

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As the world becomes ever more reliant and driven by technology, what should banks consider when searching for a credit card processor?

The Qualtrics credit card report showed that people on average own 2.5 cards, 62% of cardholders rated rewards as a key attribute when selecting a credit card while 51% also valued the importance of customer service. Building loyalty and engagement are key to retain and attract cardholders, and even more so when it comes to credit.

The goal for banks is to offer a frictionless experience that is packed with great rewards, alongside positive engagement opportunities. When it comes to credit cards, cardholders want to feel in control and feel valued.

Augmented Intelligence

Augmented Intelligence has already influenced the way in which we forecast the actions taken by cardholders, who are now in the driving seat and demand the most advanced interfaces to manage their money effectively.

By utilising augmented intelligence, banks can understand the spending behaviour and deliver a credit card product that meets both the needs and wants of customers. This opens a great opportunity for the bank as fees and charges applied to credit card transactions are highly profitable.

Fees are incurred at various stages of the transaction lifecycle and several players are involved in the authorisation and settlement process. Understanding how banks can maximise API fronted real-time revolving credit processing is important to deliver a product that sits right at the top of the cardholder’s wallet.

Improved operational processes

Cloud-native credit issuing processing has the power to achieve this. Choosing the right partner means banks are backed by data-driven decisions, have the potential to improve their banking operational processes, gain greater cardholder insight and deliver high-tech fraud prevention tools.

And with over 1 billion credit cards in circulation it is no surprise banks are rushing to issuer processors to deliver on cloud-based ecosystems that have optimisation capabilities and make the whole process internally easier. Revolving interest calculations, charge backs, custom fees, and interest rates as well as reporting functions for both regulatory and in-house requirements can all be configured at tier level.

Sophisticated fraud activity has increased in line with technological advances, and now represents a material cost impediment for banks. Critical to operational integrity is the integration of the latest real-time fraud monitoring methodology.

Credit scoring functionality

Credit scoring is key to assess the risk of the cardholder and determine whether a card holder is suitable for higher levels of financing or will likely not meet repayments. It collects the cardholder’s payment history and other profile information to determine the score suitability.

Credit scoring can be a very attractive added functionality as cardholders look to purchase higher value ticket items and gain more rewards. However, there are other purposes for credit scoring such as fraud scoring and debt management, including the effective promotion of other financial products by minimising risk.

Lifetime value

Customer loyalty programmes such as reward programmes, that include cashback and retail store points are an attractive offering. With the right approach to personalisation, loyalty programmes can have direct impact in the overall customer experience as consumer preferences change. With the right processor, banks can adapt their card programme to the evolving need of the customer. Accessing the correct data in real-time, at the point of sale, positions banks well for the development of new product suites aligned to customer demand. Equally, with access to relevant data, banks can easily assess and optimise existing programmes that are not profitable or in particular demand.

We see banks improve their programmes by switching into cloud-native technology that allows them to get to know their customer and deliver products that offer value. We can help you deliver a first-class credit card solution, with seamless integration, delivering a cardholder experience way ahead of its time. In an increasingly competitive world, speed to market through proven API integrations is a key requirement of any programme.

To learn more about our credit card processing solution, Credit.Works get in touch with us.


About the Author

Christien Ackroyd

Christien Ackroyd, Senior Business Analyst at Paymentology holds an honours degree in Industrial Engineering and has 12+ years’ experience across Financial Services, Telecoms & Digital services. She is a PMI certified Project Management Professional and a Certified SAFe® 5 Scrum Master.

She is involved in client implementations and the evolution of Paymentology’s Banking.Live platform.