Page 38 - GS190401

Education

So, fintech startups and
other payment compa-
Legal ease: nies stumbled across just-
in-time card issuing to
get money out the door
and into the hands of in-
Issuing: the new acquiring tended payees. Since, in
the United States, issu-
ers are all banks, the is-
By Adam Atlas sue of money transmitter
Attorney at Law licenses is often (but not
always) quelled. For "af-
ssuing is the new acquiring. Formerly, card issuing strictly involved printing physical filiate payout" providers
cards and sending them by special delivery to cardholders, who would then call their and business "supplier
issuers to activate their cards, then start spending via card-present transactions. That payments," VAN issuing
I was your dad's issuing business. Today's issuing involves issuing thousands of sin- is a convenient way to
gle-use prepaid debit or even credit cards, also known as virtual account numbers (VANs) facilitate outdoing pay-
that fly around the world in seconds to be "presented" at acquirers who might also be cre- ments. A combination of
ating payfac sub-merchant accounts in similar quantities to help accept them. This article the cost of money trans-
highlights issues related to the torrent of issuing occurring now – without out knowledge. mitter licensing and the
ease of distributing VANs
What is a VAN?
How does it work?
A VAN, or virtual account number, comprises the same 16 digits we are used to seeing on
credit and debit cards and, but for the lack of a physical card, performs the same function Banks operate issuing
as a physical payment card. A VAN has an issuer and authorizations and card balances that programs using a pro-
enable the cardholder to spend with the VAN. A virtual card can be uploaded to a phone gram manager that is es-
wallet and enable NFC payments from the phone. sentially an ISO, but for
card issuing instead of
Why rush on issuing? acquiring. The program
manager is like a "whole-
Issuing is the poor man's money transmission. For a payments company to send value from sale ISO" and takes charge
Person A to Person B, a payment company normally requires money transmitter licens- of finding cardholders,
es from each state and a registration with the U.S. Department of the Treasury Financial hiring a processor to
Crimes Enforcement Netork (FinCEN). That process takes a long time and costs about $2 handle card issuing data,
million. ensuring that cards are
funded, monitoring card
load transactions for AML
and other suspicious ac-
tivity and overseeing the
/USAePay compliance and security
/USAePay
of the program. Issuing
banks do surprisingly lit-
tle. The program manag-
SMARTER SOLUTIONS ers guarantee to the issu-
ing banks that cards will
FOR SECURE PAYMENTS be funded and provide
first-line customer sup-
port to cardholders.
Ecommerce
Any AML concerns?
Retail
Given that VANs are is-
sued by the thousands and
WELCOME
can be used anywhere in
the world in seconds, they
Mobile
engender AML concerns.
The program manager,
under the supervision of
www.USAePay.com 866.490.0042
the bank, is charged with
overseeing issuing pro-

38