Issuers Race to Win Spending Before the Card Arrives

Waiting for a physical card to arrive is becoming less relevant to the moment when an issuer can start competing for a cardholder’s spending.

PYMNTS Intelligence’s “Issuer Engagement Playbook,” produced in collaboration with Visa DPS, finds that 59% of U.S. card issuers now offer automated or real-time card issuance to digital wallets, up from 32% a year earlier. The research is based on a survey of 500 executives in head-of-payments roles at U.S. bank and non-bank card issuers.

The rapid adoption is beginning to affect a different part of the card business: the relationship between issuers and their processors. Two-thirds of issuers, or 67%, cite instant issuance to a digital wallet as a factor in their preference for an issuer processor. That puts it just ahead of dynamic CVV at 66%, digital-wallet integration at 63%, EMV chip technology at 61% and real-time transaction notifications at 61%.

For processors, the competitive requirement is moving beyond connecting a card program to a digital wallet. Issuers increasingly need infrastructure capable of provisioning a newly approved card quickly enough for the customer to begin using it without waiting for plastic.

The adoption data show how quickly that expectation has developed. Among high customer lifetime value (CLTV) issuers, real-time wallet issuance rose from 40% to 66% in a year. Among medium-CLTV issuers, it climbed from 35% to 68%, while adoption among low-CLTV issuers increased from 26% to 50%.

Instant issuance isn’t confined to the issuers with the strongest customer economics. It is spreading across performance tiers, reducing the ability of processors to treat it as a premium capability.

The pressure also extends beyond issuance itself. Once a card is provisioned immediately, other processor capabilities determine what happens next, including wallet integration, transaction notifications and security features. An issuer that can put a card into a wallet immediately but cannot support the digital experience around it has solved only the first part of the problem.

Activation Moves Into the Processing Decision

The economics behind that investment are tied to what happens immediately after account opening.

More than half of issuers, 56%, identify improving approval and onboarding as a strategy for increasing CLTV. Enhanced mobile and app experiences follow at 54%, while 51% use fraud-prevention tools specifically to reduce cardholder friction.

Issuers are also trying to influence behavior shortly after activation. High-CLTV issuers use early-lifecycle interventions such as welcome nudges, first-transaction prompts and early-spend bonuses at a 40% rate, compared with 24% of low-CLTV issuers. They also use churn-prediction analytics more frequently, at 51% versus 35%.

Instant issuance gives those strategies an earlier starting point. Instead of an activation process interrupted by several days of waiting for a card, approval, provisioning and initial use can occur within the same digital interaction.

For processors, that puts more of the cardholder experience onto the technology stack they provide. Speed at issuance, wallet connectivity, transaction visibility and the tools issuers use after activation become interconnected parts of the processor relationship.

The implications reach beyond winning new processing mandates. The report noted that issuers may consider switching processors if their providers cannot deliver real-time wallet issuance.

With adoption already at 59%, instant issuance is moving toward a baseline capability rather than a differentiator. The competitive question for processors is becoming how well they support what issuers want to do once the card reaches the wallet.

At PYMNTS Intelligence, we work with businesses to uncover insights that fuel intelligent, data-driven discussions on changing customer expectations, a more connected economy and the strategic shifts necessary to achieve outcomes. With rigorous research methodologies and unwavering commitment to objective quality, we offer trusted data to grow your business. As our partner, you’ll have access to our diverse team of PhDs, researchers, data analysts, number crunchers, subject matter veterans and editorial experts.