Physical and Digital Instant Payment Card Issuance Can Coexist—Here’s How Vendors Should Respond

Market Overview

Physical Instant Card Issuance

• North America is the largest regional market for physical payment instant cards (ATM, credit, debit prepaid), with major instant issuance providers entrenched in the region. Annual shipments for physical instant payment cards in North America are set to grow from 47.4 million in 2022 to 123.9 million in 2027.
• Latin America is seeing some of the most significant movement in the physical instant issuance market, increasing from 117.7 million instant issuance shipments in 2022 to 176.4 million in 2027. Highly populated countries with many neobanks, such as Mexico and Brazil, often supplement their instantly issued digital cards with physical ones.
• Europe will experience growth from 27.6 million units in 2022 to 62.1 million in 2027. While there is identifiable growth, Europe as a region is not seeing mass adoption for physical instant card issuance outside of the neo and challenger bank space.
• Asia-Pacific will see instantly issued physical payment card shipments increase from 40.4 million in 2022 to 92.0 million in 2027. Limited interest in instant issuance for mass card issuing countries, such as China, coupled with a general focus on centralized issuance, will result in a medium level of shipment growth in the region.
• As it relates to the Middle East & Africa, physical instant payment card issuance shipments are forecast to increase from 10.2 million shipments to 16.6 million in 2027. Countries like Saudi Arabia and Jordan are well versed and equipped for instant issuance solutions and account for a significant amount of market growth in the region, while countries like Pakistan are still playing catchup to the rest of the region.

Digital Instant Issuance

• North America will emerge as one of the largest markets for digital instant payment card issuance, climbing from 92.3 million digital instant issuance shipments in 2022 to 276.3 million in 2027 as a result of the increasing adoption rate of online payments and digital transactions.
• Latin America is a rapidly growing market for digital instant issuance solutions, with countries like Brazil, Argentina, and Mexico driving the market as it relates to volumes. Increasing from 63.5 million units in 2022 to 294.9 million in 2027, the market drivers in Latin America lean toward mobile banking and online payments.
• Europe will certainly grow as a market in terms of digital instant payment card issuance, though at a lower level than other regions, climbing from 73.2 million shipments in 2022 to 233.8 million in 2027. Neo and challenger banks have been present for a number of years, with banks like Curve, Monzo, Revolut, and Atom Bank disrupting the traditional banking sector by providing more innovative digital instant issuance solutions.
• In the Asia-Pacific region, there is a clear push toward digitized banking and payment solutions, such as mobile wallets and digital payments, coupled with a rapid proliferation of QR code-based transactions. As a result of these trends, the market for digital instant payment card issuance will increase from 168.3 million shipments in 2022 to a forecast 748.6 million by 2027.
• Finally, the Middle East & Africa is also seeing market growth in digital instant issuance, with countries like the United Arab Emirates (UAE), Saudi Arabia, Nigeria, and South Africa demonstrating a good level of adoption of virtual solutions. Shipments are set to increase from 13.9 million in 2022 to 53.0 million shipments in 2027.

ABI Research believes that neither the physical nor the digital side of the market is taking share from the other at this point, and they are not expected to become competitive over the forecast period ending in 2027. As it stands, digital-first has not become digital only, and while the physical card remains the most favored for Point of Sale (POS) transactions, digital has earned favor in e-commerce. This trend implies that the use case takes precedence over the form factor.

“The payments market is converging with other smart card verticals as it relates to ticketing and access control in markets like retail, travel, and education. This is driving new entrants into the payments market by players for which an instant issuance experience is already common.” – Samuel Gazeley, Industry Analyst at ABI Research

Table 1: Total Physical Instant Issuance Card Shipments (Millions) by Card Type

Key Decision Items

Physical Card Issuers Should Critique Their IT Situation

Payment card issuers should internally assess their current Information Technology (IT) infrastructure to clearly understand its strengths and limitations. The consulting segment will set out the variety of systems required to manage an instant card issuance process and create the opportunity to scope a solution that can be integrated at minimal cost to the issuer, while slotting it into the architecture already in use. Consequently, the payment solution in its final form could then be limited to Europay, Master Card, Visa (EMV) data processing and card personalization, or extended to include enrolment or Personal Identification Number (PIN) management as necessary.

Don’t Do Away with In-Person Banking

ABI Research recommends that financial institutions that still maintain a physical branch presence should consider pursuing a hybrid, “phygital” approach. By offering banking services through a singular, secure digital platform, while also offering in-person appointments with banking staff when customers make significant financial decisions, such as mortgage applications, the best of both worlds can be achieved from the customers’ view.

Physical Instant Issuance Solutions Need Diverse Support for Personalization Equipment

The chosen physical instant issuance solutions should be made compatible with a wide range of card personalization equipment to ensure as wide a range of choices as possible. Customers are becoming increasingly selective about the businesses they transact with and the banks they procure services from. Offering solutions with compelling and attractive card designs, or allowing the end user to select their own design is very much recommended in order to draw in new user bases.

Financial Institutions with Virtual Cards Must Keep Close Ties with Third Parties

As it relates to digital instant issuance, financial institutions looking to implement virtual cards should seek regular communication with their chosen issuer processor and other agencies involved in the process. By keeping communication lines open, other factors like technology enablement, fraud risk assessment, customer journey design, and business case formulation will be supported throughout the process and can be key determining factors in the success of such projects. This is even more critical in the case of incumbent brick-and-mortar banks playing catch-up to digital-first neo and challenger banks.

Be Sure to Support Streamlined Funding

Part of the value proposition in digital instant issuance is the streamlined funding aspect, so it is highly recommended that the technology platform backing a virtual card program can power a high level of functionality in that area. The early days of virtual card issuance saw a requirement for card programs to hold a significant amount of funds in a reserve account or apply for an unsecured line of credit. Now this has shifted to enable more agile funding mechanisms that consume a lower amount of capital and can reach a wider range of prospective customers.

Leverage Spending Data for Digital Cards

The spending data from end-user purchases are a key resource to be gathered and can prove very valuable for organizations. Gather such data streams and analyze them in order to make decisions around budgeting, monitor costs, and bargain for better agreements with suppliers, as well as other benefits. However, these benefits only become available in the event that businesses can access transaction data with ease and integrate that with their relevant back end systems. When considering an environment for digital card issuance, those that fail to offer direct connectivity to such systems risk siloing a critical resource. The process to then have these data handled manually is far more time-consuming and costly.

Key Market Players to Watch

• Apple
• Entrust
• Fintech
• Google
• PayPal
• Samsung
• Visa

Dig Deeper for the Full Picture

To learn more about the latest instant payment card issuance market trends, drivers, inhibitors, demand forecasts, and vendor ecosystem, download ABI Research’s Physical and Digital Instant Issuance: Migrating to a “Phygital" Experience research report.

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This content is part of the company’s Digital Payment Technologies and IoT Cybersecurity research services.