Instant or digital: What card issuance is right for your financial institution?


July 10, 2019

One of the first major lenders to introduce instant issue debit cards in their branches announced they were discontinuing the program. Meanwhile, other major financial institutions continue to offer the service. In fact, 46 percent of the top 50 U.S. banks and credit unions by asset size have adopted instant card issuance technology, according to a report from the Mercator Advisory Group, and the Aite Group forecasts that the number of institutions offering the service will grow by 65 percent by 2021.

While the aforementioned lender cited fraud concerns as a primary reason for eliminating instant issuance at their branches, other financial institutions say that instant issue technology is an effective way to reduce card theft through the mail. Divergent opinions regarding instant issuance can be confusing for financial institutions that are considering whether to adopt an instant issuance program, continue one that is already in place, or even add a digital issuance option. In this article, we’ll take a look at some of the nuances of the topic so you can make the right decision for your institution.

Factors driving instant issuance

Instant issuance has been an attractive offering for financial institutions for three primary reasons. First, it gives institutions a competitive edge by keeping pace with consumer demand for fast, convenient financial services. Research indicates that consumers appreciate instant issuance options; a recent study revealed that the service influences their choice of financial institution for 36 percent of debit card users, and 47 percent for 18-24 year olds.

Second, many financial institutions view instant issuance as a way to increase security and address fraud concerns by more quickly getting EMV chip cards in their cardholders’ hands. This can give an institution an important competitive advantage since the majority of consumers (76 percent) view EMV chip cards as more secure.

Third, instant issuance often allows financial institutions to position their card top-of-wallet and immediately start capturing interchange revenue. Studies show that eliminating the lag-time for account holders to receive their card in the mail and activate it leads to higher use and better performance; instant issuances result in 30 percent of cardholders using their card on the first day and 70 percent within five days. Over a 45-day period, instant issuance cards outperformed mailed cards by 53 percent.

What about digital issuance?

While instant issuance is “table stakes” for many financial institutions, digital issuance is not yet a standard offering in the industry. According to Worldpay Product Manager Jared Morgan, who specializes in the topic, digital issuance is virtually nonexistent in the current marketplace. However, he notes it is on institutions’ 24-month roadmaps.

“I think we will start to see it, and the uptick in mobile wallets will help drive it,” Morgan said. “But because adoption is still relatively new for mobile wallets, it’s not at the forefront of people’s minds.”

Additionally, Morgan notes that it’s not a matter of digital issuance replacing instant issuance, or even about institutions needing to offer both solutions. Instead, it’s about two different demographics and two different strategies to complete a card issuing strategy.

“Every institution is going to have a demographic that won’t embrace the digital age, that isn’t using Apple Pay, and won’t use it in the next three to five years,” Morgan said. “I really think institutions are going to develop a better understanding of the fact that there are two important ways they should be thinking about their card issuing strategy over the next few years.”

Choosing your strategy

Meeting consumers’ expectations for secure and convenient access to their bank accounts and creating a positive experience for account holders are two of the most important considerations for all financial institutions. Whether instant issuance, digital issuance, or other card issuance strategies are right for you institution depends on many factors. To learn more about your options, and for expert guidance on the right path to take, contact us or your trusted payments provider.