What Is a White Label Debit Card (And How Does It Work)

Launching a white label debit card means a fintech brands and sells a payment card while a licensed partner handles the banking behind it. The fintech will have the customer relationship and the brand, but another company will handle the connection to the card scheme and regulations for the cards. This allows the fintech founder to launch their cards without having to be a bank first.

What is a white-label debit card?

A white label card program is one that features the brand of a fintech company but uses a licensed card issuer's bank and BIN number for the card. The card will feature the brand and the fintech, but will use the licensed company's BIN number for the card, and will be the official issuer of the card.

How does white-label card issuing work?

White label card issuing uses three main components to issue the cards to customers: a BIN sponsor to issue cards under, choosing between BIN sponsorship and Mastercard or Visa membership, and an API to manage the actual cards after they are live.

The role of BIN sponsorship

The license to issue white-label cards with a BIN number belongs to licensed companies in the banking industry. These companies can issue cards under their own BIN numbers for the cards they create, an arrangement known as BIN sponsorship. The fintech will get a brand and a customer-facing company, but will not be the official issuer of the cards.

BIN sponsorship vs. principal membership

There are two main ways to create white-label cards: through BIN sponsorship or through becoming a Mastercard or Visa principal member.

Mastercard and Visa require principals to own and manage the relationship with their cards and the licenses behind them. This is expensive and takes time to obtain licenses and prove compliance with their requirements. For a fledgling fintech, it is not a practical first move. Through BIN sponsorship, the fintech can launch quickly and avoid the licensing costs.

The card issuing API

A fintech can use an API to launch and manage its white-label cards. This API will let them manage the actual lives of the white-label cards. It will allow them to order and manage the number of cards the company will have, activate or block cards, check balances, change the PIN of the card, replace stolen or lost cards, and tokenize the card to use with digital wallets.

What can you build with a white-label card program?

There are several products a fintech can build that use the card program:

These can also come in several physical features, such as biometric cards, wearable cards, or even be made from metal materials instead of plastic. Some fintechs go a step further and run a co-branded card program, pairing their own brand with a retailer or loyalty partner on the same card.

Common uses of white-label cards

Debit and prepaid cards are the most common with neobanks. These companies use the cards as the main product for their customers' current accounts.

B2B companies use these cards as a way to pay payroll or manage business expenses for their employees.

Companies in the travel and remittance space will use these programs with multi-currency travel cards that can be used abroad.

Companies in the loyalty and reward programs can use the white-label cards with rewards from their products or services.

Finally, companies in the marketplace or gig economy can use these products to pay their workers or sellers directly instead of through bank transfers.

What a fintech founder needs before launching a white-label card

A fintech founder will have three main requirements to launch their white-label cards and meet regulations for these products.

Licensing and regulatory status

The company will have licensing and regulatory status for its products. In Europe, they will require an EMI license. Alternatively, they can become an EMD agent for another company with an EMI license, allowing them to operate under another company's license. Getting such a license can take between six months and two years. For the fintech founders, the licensing from another company is much faster than getting licensed themselves.

Each person who will use these cards will have to pass a KYC and AML check to receive their card. These will include verifying their identity and checking for money laundering or terrorist funding. These will happen under the joint management of the fintech and the company behind the license for the cards.

Compliance and security requirements

Any company creating white-label cards must follow the PCI DSS standard to manage its data security. This will create high costs for the fintech company in managing this. To avoid this, most will use their own licensed issuing company's infrastructure, which is already PCI DSS certified.

All white-label cards will require 3DS2 authentication for all card transactions to comply with PSD2 for Europe. This authentication will include biometric data and out-of-band authentication codes, adding an extra verification step at checkout so the transaction can be confirmed as genuinely coming from the cardholder.

Fraud and risk management

Fraud will have to be managed for the company's products. This will involve setting up rules for transactions that pass or fail, the management of chargebacks, and 24/7 monitoring for any transactions. Most fintechs will not have the expertise to manage this in-house when launching their first product. Instead, this will be done with the issuing company or the processing company behind the product.

How long does it take to launch a white-label card program?

Launching a white-label card program involves a few stages, starting with defining the white-label card program itself. The fintech will share details about its business and the type of card it would like to launch, after which the white-label card partner will respond with an offer.

Following acceptance of the offer, the compliance departments of the card partner will begin the onboarding process of the fintech and its business before the partnership is formally established. Following this stage, the actual implementation of the program will begin. Processes include connecting to the card scheme, setting up the technology integration, creating the cards themselves, and establishing rules regarding fraud management for that business. Physical card production runs through a card personalization bureau, the facility that embosses, encodes, and prints each card before it ships, which is why card design and material choices need to be finalized before this stage can complete.

Finally, once all of these steps have been completed, the fintech can begin issuing the completed white-label cards to its customers, and the program will be live and running.

The length of time required for the program to be live will largely depend on the state of preparation of the fintech company going in. Founders who are looking to create a more complex program with a variety of different cards, markets, and features will require more time than a company that is producing a relatively simple type of card program.

What does a white-label card program cost, and how does it make money?

Cost and revenue go hand in hand for a white-label card program.

Setup and ongoing costs

Costs for a white-label program contrast with the costs of principal membership in that there is no need to meet the infrastructure requirements of the card scheme for a white-label company. Costs for a white-label program will only be the fees for setting up the program and the fees charged to each card owner for specific activities with their cards.

Revenue streams for card issuers

There are a few different types of revenue that can be earned by a company that is issuing white-label cards.

Interchange fees are the most common source of revenue for a card company. These fees are collected from the merchant by the bank where the cardholder has an account each time the cardholder makes a purchase with that card. Other fees include transaction fees, which may be charged for specific types of transactions, and cardholder fees, which can be applied to the accounts of cardholders for fees like annual membership fees or fees should the cardholder request a new card.

Things to consider before choosing a white-label card partner

A few considerations before launching a white-label card program with a third-party card issuing partner include the processing of the card transactions. For instance, the third-party company may perform these in-house or may outsource them to a third-party company.

The API that the third-party company uses to manage the program is another consideration; a well-documented API with a variety of features will save the fintech company and program considerable engineering time during its initial launch.

Another consideration is the type of support that they will offer to the third-party company once the program is live; there will be issues with the program that require support, and it is essential that the third-party partner supports the company even after launch. Other considerations include the type of connectivity they use with the card schemes and the certifications that the companies hold, both of which can be confirmed prior to the launch of the white-label card program by the fintech. Finally, considerations regarding how costly the program is to launch versus how much revenue can be expected will help the fintech company to understand whether or not the program is likely to be profitable in the future.

Launch a white-label debit card program with DECTA

DECTA's white-label card program and BIN sponsorship solution are built with the requirements discussed above. By integrating with DECTA's API, a fintech will have complete control over the life cycle of their white-label cards. Processing will happen in-house by DECTA, with 3D Secure access with biometric authentication built into their system.

Fraud rules will be established on an individual basis for each business that wants to launch a white-label card program, with 24/7 automated fraud monitoring and reporting built into their platform. To launch a program, the fintech will have to define its program, complete compliance, connect to Mastercard, design its cards, and then begin issuing its cards under the BIN range of DECTA. Thus, a company that is planning to start a fintech and offer financial products to its customers will have a defined path to launching its own brands of white-label cards without needing to become a licensed card issuer itself.

FAQs: White-label debit cards

What is the difference between a white label card and a private label card?

White-label cards use a full card network like Visa or Mastercard, and are, therefore, accepted anywhere those cards are accepted. Private-label cards are typically only used within one merchant.

Is white-labeling a card program legal?

Yes. A company that is launching a white-label card program will be using the licenses of another company; the company will be the brand, but it will be under a licensed company's BIN range.

Can a fintech launch a card program without its own banking license?

Yes. This is exactly one of the benefits of BIN sponsorship.

How much does it cost to launch a white-label card program?

There are two main costs and requirements for launching a white-label program. For principal membership, there are various costs and requirements for the banking entity to meet. For BIN sponsorship, the cost will be the setup fees and costs for each card owner, rather than the millions of euros that would be required to establish the infrastructure to support the program.