Card Issuing Spurs Vertical Breakouts
Nikil Konduru, GTM Strategy at Lithic, on the future of card issuing
The big implication is that card infrastructure will keep minting new categories whenever a company uses cards as a hidden operating rail instead of as a consumer banking product. BNPL broke out because virtual issuing turned installment credit into a button at checkout. The same pattern fits expense workflows, insurance payouts, procurement, travel fulfillment, and vertical SaaS products where cards replace checks or ACH and turn a slow back office step into software.
-
All-in-one BaaS works best for teams that want an off the rack launch. The provider handles the sponsor bank, core compliance setup, and standard card flows. Point solutions fit companies that already know the exact workflow they want, like custom KYC rules, multiple card products, bespoke physical card needs, or direct bank coordination.
-
The reason breakout segments appear suddenly is that interchange changes the business model. A product can look free to the user while the company gets paid on transaction volume in the background. That was true for Klarna, and the same mechanic can power niche software products once card issuing is embedded into their workflow.
-
Point solutions also map better to embedded finance than pure fintech. A delivery app, procurement tool, or insurance platform uses issued cards to make its core product work better, not mainly to become a bank. That creates a wider long tail of use cases, even if each customer starts smaller than a Chime or Cash App.
Over the next decade, the winners in issuer processing will be the systems that let customers start simple and then unbundle as complexity rises. More card programs will begin inside packaged BaaS stacks, then migrate toward modular issuing once the company wants finer controls, more products, and deeper ownership of the bank and network relationships.