HomeBlogTrendsAll You Need to Know About Cards – Guide of card types and their use cases

All You Need to Know About Cards – Guide of card types and their use cases

Welcome to our new article series, “All You Need to Know About Cards.” In this series, we’ll delve into the realm of payment cards. In this (1/3) article we will go through their types, applications, and even industry-specific uses. 

What are the main card types?

The domain of card payments has grown remarkably recently, captivating the payments marketplace and presenting vast opportunities for innovation and additional revenue streams. Consequently, launching a card programme offers various types of businesses a promising opportunity to outmanoeuvre competitors, enhance customer loyalty, and generate income through interest charges.

Payment card types can be distinguished by the features of each card or the type of client. Here’s a brief description of the most popular cards.

Credit cards

A credit card is a payment card made of plastic or metal provided by a bank or financial services company with a banking licence. Credit cards give you access to a line of credit issued by a bank. This card enables cardholders to borrow funds, which they can use to make purchases from merchants who accept card payments. However, using a credit card comes with the responsibility of repaying the borrowed amount and any applicable interest and agreed-upon charges. 

Debit/prepaid cards

Debit cards are like credit cards. Both a bank with a banking licence or a financial institution with a payment institution or e-money licence can issue them. However, there is a fundamental difference between the two. While a credit card allows you to borrow money from the card issuer and pay it back later, a debit card is directly linked to your bank account. When you use a debit card for a purchase or ATM withdrawal, the funds are instantly deducted from your bank account, utilising the money you have deposited. In this way, a debit card enables digital transactions using your existing funds without incurring any debt.

Virtual cards 

A virtual card is a digital credit card issued by a bank or credit card issuer, comprising a credit card number, CVV code, and expiry date. Unlike physical cards for in-person retail shopping and cash withdrawals, virtual cards are designed for online shopping. They are temporary and exist solely in a digital format. Nevertheless, virtual cards remain connected to a bank and/or credit card account, ensuring seamless processing of transactions.

Consumer cards

A consumer payment card is a financial instrument issued by a bank or financial institution that allows consumers to make purchases and payments for goods and services. Consumer payment cards offer a secure and widely accepted payment methods. In addition to enabling various types of payments, consumer payment cards often come with various perks and benefits that enhance the overall user experience and provide incentives for cardholders. These perks can vary depending on the card type and the issuing bank. Still, some common benefits include rewards and bonuses, cash back, sign-up bonuses, travel benefits, purchase protections, exclusive discounts, no foreign transaction fees and others.

Business cards

Business payment cards are issued by banks or financial institutions and designed for business use. These cards offer convenient and efficient payment solutions tailored to meet the needs of businesses, ranging from small enterprises to large corporations.

Business payment cards offer several benefits to companies, including improved cash flow management, enhanced expense tracking and reporting, and the potential to earn rewards or cash back on business-related spending.

Which industries might have an interest in issuing cards?

As the world embraces digital financial solutions, debit cards have emerged as versatile tools catering to various industries. Whether it’s streamlining payments, promoting brand loyalty, or enabling financial inclusion, the appeal of issuing debit cards continues to grow, transforming how businesses interact with their customers in the ever-evolving landscape of modern finance.

Not limited to traditional banks, various industries have recognised the potential of debit cards and eagerly embraced their issuance. Let’s explore the diverse sectors that find debit cards a valuable addition to their offerings:

Fintech Companies: Fintech firms thrive on innovation and disruption in the financial landscape. Issuing debit cards allows them to provide seamless payment solutions to their tech-savvy customers, enhancing user experience and complementing their digital banking services.

Travel Companies: Travel businesses understand the importance of hassle-free payments for their globetrotting clientele. Debit cards offer travellers a convenient way to access funds and make payments in different currencies without the burden of hefty foreign transaction fees.

Merchants: Merchants and retailers can expand their customer base by offering co-branded debit cards. These cards promote brand loyalty and offer customers attractive discounts and rewards, further boosting sales.

Insurance Companies: For insurance providers, issuing debit cards can streamline claim settlements and policyholder reimbursements. Instant access to funds empowers customers during emergencies, making the claims process more efficient.

Advertising Firms: Debit cards with exclusive advertising partnerships can be an innovative marketing tool. Offering branded cards as rewards or incentives can enhance brand visibility and forge stronger consumer connections.

Cryptocurrency Platforms: Crypto companies recognise that bridging the gap between digital assets and traditional finance is essential for mass adoption. Debit cards linked to crypto wallets enable users to convert and spend cryptocurrencies for everyday purchases.

Microloan Providers: Microloan companies empower individuals with limited access to traditional banking services. Issuing debit cards to approved borrowers provides a convenient channel for loan disbursements and repayments.

Digital Wallet Providers: Digital wallets play a significant role in the mobile payment revolution. Issuing physical or virtual debit cards linked to wallets allows users to transact online and offline easily.

Banks: Traditional banks continue to embrace debit cards as a fundamental offering in their product portfolios. Banks ensure easy access to funds and drive customer engagement by providing debit cards.

Money Remittance Services: Debit cards prove invaluable for money remittance companies, facilitating fast and secure cross-border transfers. Beneficiaries can use the cards for withdrawals or purchases in their local currency.

There are additional use cases where cards prove to be useful, and there are over a dozen solutions available for your business. If you’d like to learn how cards are issued, we suggest to read to this article. If you’d like to understand how to issue your own cards, you can find that information in this article.

Do you have any questions or require guidance on card solutions for your business? Please don’t hesitate to reach out to us! We’re here to assist you with your card-related inquiries and other fintech-related matters.

Finoma is independent FinTech consulting company helping clients to develop and manage innovative solutions and services in fintech and digital payments.

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