The payment landscape is evolving rapidly, and modern card processors are playing a critical role in enabling tailored solutions for diverse use cases. Innovation is no longer optional – it's essential. Modern card processing demands more than operational efficiency, it requires addressing unique challenges across the payments ecosystem.
In our previous blog, we discussed the role of banking and payment licensing in the success of card processors. Licensing alone is not enough on its own to drive growth or a competitive edge in the evolving payments landscape. Sucess lies in the ability to integrate licensing with other elements such as open APIs, regulatory coverage that focus on specific customer needs or different parts of the card issuing process.
This blog explores the functional innovations that define next-generation card processors. By leveraging a structured approach built on five functional layers: core functionalities, cloud-native architecture, platform integrability, regulatory coverage, and innovative features – next-generation card processors are driving transformation across the industry. To test this hypothesis, BPC and Arkwright conducted an analysis, with the full results detailed in the “Next Generation Card Processing” guide.
Core Functionalities: Foundational Card Processing Capabilities
Core functionalities such as card account setup, fraud monitoring, chargeback handling and transaction processing have become a standard across the industry. These capabilities, once seen as competitive differentiators, are now baseline offerings provided by most card processors. While they remain essential, they no longer offer a unique competitive edge in today’s evolving payments landscape.
These core functionalities are often enhanced with additional technical features and enhance security measures like 3D Secure and fraud prevention. For example, the ability to issue cards in digital wallets, secured by tokenization has become a common feature. These functionalities, including cardholder management and transaction authorization, ensure smooth and secure operations addressing the essential needs of modern card processing.
By leveraging these core functionalities as a foundation, card processors can move beyond commoditized offerings to introduce innovative, tailored solutions, meeting unique market demands.
Platform Integrability: Modern APIs
Offering open APIs has become a standard in modern card processing, but the quality of those APIs remains a critical factor in success. High-quality APIs, supported with comprehensive documentation, and a tech-driven culture are crucial for being considered a relevant partner in embedded finance. Platform Integrability focuses on how APIs integrate with third-party systems to deliver tailored solutions to meet diverse customer needs.
For example, microservices and scalability allows processors to independently scale components, supporting cost-effective “‘build once and grow” strategies. Real-time connectivity and performance ensure instant, event-driven transaction processing while parametrization and personalization empowers issuers to make dynamic decision-making capabilities, such as setting user-specific thresholds or credit limits.
By focusing on platform integrability, card processors can improve operational efficiency and support the development of innovative, tailored solutions that can adapt to the evolving demands of the payments ecosystem.
Innovative Features Transforming Card Processing
The mix of foundational layer – core functionalities, cloud-native architecture, and platform integrability provides a strong base for processors to compete in the market. However, it is the innovative features layered on top that are expected to drive differentiation and competitive edge. According to insights from over 45 processing providers and 150 client wins, the report highlights the top five innovative features reshaping the industry.
- Program Development and Management: Strategic support for card program planning, product development, sales training, and go-to-market strategies, enables issuers to launch and scale products effectively.
- No-Code/Low-Code Program Setup: Self-service card setup with drag-and-drop interfaces simplify card program deployment. Issuers can quickly roll out customized programs without relying on heavy technical resources.
- Credit-Scoring-as-a-Service: Real-time credit scoring combined with adjustable risk thresholds and regulatory compliance allows issuers to offer revolving credit cards and tailored consumer finance solutions.
- AI-Powered Customer Support: GenAI-powered chatbots provide automated, multi-channel customer support, reducing operational costs while improving customer satisfaction and engagement.
- Merchant-Related Solutions: Tailored programs such as including temporary virtual cards for transaction splitting, FX, and payouts address the needs of marketplaces and SME finance.
Modern card processing is no longer about meeting minimum requirements. It’s about leveraging layered innovations to deliver tailored solutions that address specific needs. From core functionalities and modern APIs to innovative features, processors are reshaping scalability, adaptability, and personalization in the payment ecosystem.
No single provider offers all the innovative features identified, presenting an opportunity for differentiation by combining technology, regulatory compliance, and addressing the needs of specific customer groups.
As competition increases, processors that prioritize innovation and deliver features that solve challenges will lead the industry. Read our guide to learn how these innovations are shaping the future of card processing.
If you would like to know more about next-gen card processing, download the full whitepaper.