Orchestration Layers vs Processor Infrastructure
Nikil Konduru, GTM Strategy at Lithic, on the future of card issuing
This reveals that many BaaS platforms are packaging card issuance, not owning the hardest layer themselves. In practice, the BaaS company may handle onboarding, compliance workflows, sponsor bank coordination, and developer experience, while a separate issuer processor actually sits in the transaction path, connects to Visa or Mastercard, approves or declines swipes, and handles clearing and settlement. That split is why Lithic positions itself as infrastructure for the infrastructure layer.
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The stack is usually bank, issuer processor, then BaaS or program manager. Unit and Treasury Prime are examples of all in one platforms that assemble third party processors rather than building every card rail component from scratch, which lets customers launch faster without stitching together bank, KYC, ledger, and card network connections themselves.
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The issuer processor is the system that actually moves card programs day to day. It parses network messages, enforces authorization rules, manages card lifecycle events, and supports reconciliation. Lithic describes its role in exactly those terms, handling network connectivity and processing while integrating with outside KYC, compliance, and fraud tools.
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That layered model creates a real tradeoff. Bundled BaaS gets products live quickly, but as programs scale they often want more control over bank relationships, custom KYC and AML flows, physical card setup, or new credit and debit products. That is the moment when companies often move from an all in one BaaS provider toward a direct processor relationship.
Going forward, more of the market is likely to separate into orchestration layers and deep infrastructure layers. The orchestration layer wins on speed and convenience. The processor layer wins when card issuance becomes core to the product and the customer needs tighter economics, deeper control, and more product flexibility. That is the lane where modern processors like Lithic are trying to become the default building block.