How to Start a Credit Card Issuing Company

by Amber Keefer; Updated September 26, 2017

Banks, credit unions, businesses and other organizations frequently enter the credit card market as a way to better serve consumer or member needs. Businesses and financial institutions may choose to introduce credit card programs and services not only to generate more revenue and offer current customers more, but also to attract new customers. Starting a credit card program is not an easy venture, but there are several different options available for small card issuers.

Items you will need

  • Established Website
  • Affiliate Partner
  • Startup Costs
  • Affinity Credit Card Program
Step 1

Earn commissions by joining a credit card affiliate program to promote the products and services of online credit card merchants. Create a website where you can market credit card products and services. Once you establish a website, post links to the websites of merchant partners.

Step 2

Enter into a partnership with a major bankcard company like Visa or MasterCard. If your nonprofit organization participates in an affinity credit card program, the group will be compensated for endorsing the card by being paid a percentage of each credit card transaction processed through the bankcard service. In addition, a small issuer can often gain an economical advantage by partnering with an agent card issuer; yet still remain in control of its card program, but at a more affordable cost.

Step 3

Contract with a company or corporation that is specifically in the business of providing credit card services. There are definite advantages to outsourcing the actual management of customer service and payment processing and collections functions related to your credit card program. A primary advantage is allowing smaller card issuers to compete in the credit card market by allowing larger companies to assume the expenses and risks associated with a credit card program.

Step 4

Pay any start up costs, deposits, and processing fees required. These can vary. Choose from a variety of Visa and MasterCard products available. Establish the terms and conditions by setting rates and credit limits as permitted under your state’s laws. Design a logo for the card to broaden brand identification.

Step 5

Market the credit card program. With marketing costs increasing, more small issuers are finding themselves pressured by market competition, as large card issuers have the ability to offer better credit card products. They also have the resources needed to promote products and services more effectively than the majority of the competition. In order to succeed, small card issuers must be willing to invest in promotional pricing and rewards programs to attract new cardholders. Like any other business, the goal is to attract consumers and operate at a profit while controlling costs.

Tips

  • Affiliate partners are paid a commission according to the terms of the agreement entered with the affiliate marketing network. In some cases, you may be paid a percentage for sending a customer who purchases a product or service to the affiliate merchant’s website or paid simply for the number of visitors that you send to another’s website.

    Just a few large banks control more than 90% of the credit card market, offering hundreds of credit card programs. That is not to say that small card issuers cannot gain their fair share of the market.

About the Author

Amber Keefer has more than 25 years of experience working in the fields of human services and health care administration. Writing professionally since 1997, she has written articles covering business and finance, health, fitness, parenting and senior living issues for both print and online publications. Keefer holds a B.A. from Bloomsburg University of Pennsylvania and an M.B.A. in health care management from Baker College.