Do you want to start a credit card company like VISA & AMEX? If YES, here is a 23-step guide on how to start a credit card issuing business with no money. This industry offers financial transaction issuing, reserve and liquidity services and check or other financial instrument clearinghouse services. A credit card issuing company aids businesses to process and issue payments made by their customers.

Starting a credit card issuing business might seem simple, but as a prospective entrepreneur you will need to supply your clients with the necessary gadgets with which they would process payments. You would also provide means by which such payments can be sent and reviewed by the customers’ bank for approval and then credited into your clients account.

Credit card issuing is a very unique business which can be started by people who are just starting out with business as well as business professionals. The industry has grown quite large over the years and is regarded as a multi-billion dollar industry. The economic downturn contributed a lot to the boom of the credit card issuing business because lots of people resorted to credit cards as a means of payment for goods and services instead of cash.

23 Steps on How to Start a Credit Card Issuing Company

1. Understand the Industry

There are more than 550 million credit cards in circulation in the US and more than 1 billion worldwide, according to Just 10 nations account for more than 80% of global credit card issuing revenues.  The US and Brazil are the largest by revenue, accounting for more than half of global revenue. Other major markets include Japan, Canada, the uk, and South Korea.

Interesting Statistics About the Credit Card Issuing Industry

The US credit card industry includes more than 1,100 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $85 billion. Credit card processors and Issuers provide transaction services for companies that issue credit cards and to merchants that accept credit card payments.

The Credit Card Processing and Money Transferring industry has a medium level of concentration, with the top four industry players commanding an estimated 44.8% of industry revenue in 2016. The industry is fairly fragmented because it comprises a wide variety of companies with different specialties.

Industry services include nearly every type of financial transaction, including check processing, automated clearinghouse (ACH) payments, wire transfers, debit card servicing and credit card purchases. Furthermore, given the lack of technological innovation up until recently, new industry operators are now entering the industry and beginning to take claim over market share.

Over the five years to 2016, the Credit Card Issuing and Money Transferring industry is expected to experience strong revenue growth as processors continue to reap the benefits of large-scale implementation of electronic payment technology and growing e-commerce.

In the coming years, consumer confidence is expected to continue to rise, thus expanding the amount consumers spend and increasing transaction volumes. Industry operators are expected to expand their online presence as they shift merchants of all sizes to accept electronic methods of payment as they become standard among consumers…

2. Conduct Market Research and Feasibility Studies

  • Demographics and Psychographics

Issuers provide transaction services to banks that issue credit cards and to merchants that accept credit card payments. Card issuer products include; transaction authorization and posting, statement generation and printing, and card embossing. Demand in this business or rather industry is driven by consumer spending. The profitability of individual companies depends on efficient operations, as services are sold largely based on cost.

3. Decide What Niche to Concentrate On

In the world of business, the word “niche” refers to a distinct segment of a market. Why is it important to find a business niche? Even though you’re focusing on a smaller section of what might be a wide market, you’ll discover you’ll find more customers by narrowing your focus.

The niche you choose might depend on your passion or experience, identified customers, test and launch, and many more ways. Niches in the credit and card Issuing business may include

  • E-commerce Software
  • Financial Planners & Investment Advisers
  • Consumer Lending
  • Non Profit Credit Card Issuing
  • Phone Credit Card Issuing
  • Retailing or supplying Credit Card Processing Machines
  • Banks & Credit Unions
  • Credit repair
  • Tax preparation

Level of Competition in the Credit Card Issuing Business

The credit card industry issues a massive volume of transactions — about $4 trillion this year in the U.S. With so much money in play, it’s no wonder that a host of start-ups are trying to carve out a niche for themselves and offer services to merchants and consumers that will rewrite the value they get from every credit card payment.

But the credit card Issuing industry isn’t going to change overnight. These start-ups are entering into an extremely complex and entrenched space. The credit card companies themselves aren’t going anywhere for now. Visa and MasterCard in particular will remain an indispensable part of the chain because they don’t actually process payments.

They simply provide the rails that the credit card system runs on. Credit card processors like First Data that actually do the work of processing merchants’ credit card transactions on the back-end are also in a strong position.

It is viably acknowledged that the large companies have economies of scale in processing and typically can provide more services; small companies can compete by specializing in industries and providing custom services. The US industry is highly concentrated: the top 50 companies account for about 85% of industry revenue.

4. Know the Major Competitors in the Industry

  • Alliance Data Systems (US)
  • First Data(US)
  • Global PAYMENTS (US)
  • Heartland Payment SYSTEMS (US)
  • American Express (AMEX)
  • VISA (US)
  • Western Union (US)
  • SHC Management (South Korea)

Economic Analysis

Consumers increasingly are turning to plastic over paper when they open their wallets. In 2009, credit cards were responsible for more than $2.5 trillion in transactions, according to the American Bankers Association. When you add another $1.63 trillion for debit and prepaid Visa and MasterCard’s transactions, you quickly understand that plastic is a necessary payment option for most businesses.

The proliferation of credit and card Issuing business; that is, debit, credit and prepaid cards-has dramatically changed the way we shop and merchants sell goods and services. Today, payment cards are indispensable in most advanced economies. As more consumers and merchants adopt payment cards, providers of these products may benefit from economies of scale and scope.

To date, there is still little consensus-either among policymakers or economic theorists-on what constitutes an efficient fee structure for card-based payments. Payment card networks comprise of consumers and their banks (known as issuers), as well as merchants and their banks (known as acquirers). Issuers and acquirers are part of a network that sets the rules and procedures for clearing and settling payment card receipts among its members.

5. Decide Whether to Buy a Franchise or Start from Scratch

Franchising is one of the surest ways of owning a business and becoming your own boss. It’s brand affinity, a trusted product line and corporate support which is an essential feature if you want to make name and fortunes in the credit card issuing business. Buying into a franchise in the credit and card Issuing business grants you some major advantages like

  • Following a Proven Business system
  • You know exactly what you’re getting
  • You’ll Be Selling an Established Brand

6. Know the Possible Threats and Challenges You Will Face

Setting up a credit card processing business is not difficult but have few challenges just like any other business. These challenges may be unforeseen bridges or just mere steps you need to take to start your business. But in all, let it be known that the credit card processing business is a lucrative business not just for today but in the future too.

Before you start your credit card processing business, it is pertinent for you to be aware of some of the challenges credit card processing companies face among which is fraud and identity theft. You have to go into the business armed with the necessary information and techniques to prevent such problems and tackle them whenever they occur.

  • Studying existing credit card Issuing businesses
  • Choosing your niche market
  • Establishing a relationship with as many banks and financial institutions
  • Familiarizing yourself with the products you need to buy to provide credit card processing services
  • Establishing relationships with credit card machine developers
  • Setting prices for your service
  • Hiring competent staff
  • Registering your business.

7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)

Starting at business (at home or on the side) is the dream of every entrepreneurs, but at some point, in order to actually become a business you will need to eventually decide whether you will operate as a sole proprietorship/partnership, C-corporation, S-corporation, LLC, or – in some cases – non-profit. The best legal entities for a credit and card processing business would be the LLC and the General partnership.

A general partnership is an agreement, expressed or implied, between two or more persons who join together to carry on a business venture for profit, Each partner contributes money, property, labour, or skill; each shares in the profits and losses of the business; and each has unlimited personal liability for the debts of the business.

Limited partnerships limit the personal liability of individual partners for the debts of the business according to the amount they have invested. Partners must file a certificate of limited partnership with state authorities while An LLC is a hybrid between a partnership and a corporation.

Members of an LLC have operational flexibility and income benefits similar to a partnership but also have limited liability exposure. While this seems very similar to a limited partnership, there are significant legal and statutory differences. Consultation with an attorney to determine the best entity is recommended.

This legal entity allows Greater space for decision making, support, creativity. Allow greatest flexibility and saves or limits your properties from any debt incurred by the company.

8. Choose a Catchy Business Name from the ideas Below

  • Cretrek credit services
  • Lemisaa credits
  • Fortune credit solution
  • Wall Street credits
  • Victoria Standard Cards
  • New beginnings credit services
  • Donowhale credit services
  • Legit credit repairs

9. Discuss With an Agent to Know the Best Insurance Policies for You

Many entrepreneurs feel business insurance is a luxury they cannot afford, or is an expense for more established businesses. Although it is true business insurance can be expensive, it is an expense every business, regardless of the industry, size or length of time in existence, needs to include in its budget.

Insurance has evolved as a process of safeguarding the interest of people from loss and uncertainty even if your business is to protect people’s interest like the credit and card processing business. It may be described as a social device to reduce or eliminate risk of loss to life and property.

  • General Liability Insurance
  • Property insurance
  • Errors & omissions insurance
  • Business owner’s policy
  • Workers’ compensation insurance
  • Cyber liability insurance
  • Umbrella liability insurance
  • Commercial auto / hired & non-owned auto insurance

10. Protect your Intellectual Property With Trademark, Copyrights, Patents

Intellectual property is the area of law that deals with protecting the rights and ownership of those who create original works. It covers everything from original plays and novels to inventions and company identification marks. The purpose of intellectual property laws is to encourage new technologies, artistic expressions and inventions while promoting economic growth.

If you have a great idea, logo, business name, or even an invention, you need to protect it. Ways to protect your credit repair business intellectual property may include:

11. Get the Necessary Professional Certification

Certification is sure another way to improve your skill set to be recognized for your accomplishments. In a world of brand affinity and marketing, any advantage that helps in landing a client is worth the effort.

To be competitive in today’s marketplace, you almost have to accept credit cards. Just look at the numbers. According to the American Bankers Association, in 2009 credit cards were responsible for more than $2.5 trillion worth of transactions a year and accepted at more than 24 million locations worldwide.

The Federal Reserve estimates that by 2006, the number of payments made by electronic means was twice the number of payments made by check. For an entrepreneur trying to start a Credit and card processing business, getting certified to process credit card payments should be a high priority

  • ETA Certified Payment Professional (ETA CPP)
  • Certified Payments Professionals (CPP)
  • Certified International Payment Systems Professional (CIPSP)
  • PCI Professional (PCIP)

12. Get the Necessary Legal Documents You Need to Operate

  • Insurance
  • Sales tax permit
  • Employer Identification Number (EIN)
  • Client agreement
  • Business license
  • Employment agreement
  • Nondisclosure agreement
  • Memorandum of understanding
  • Online term of use

Some states may require you to apply for a specific license that allows you to operate a credit card processing company. Check with your state department of licensing and regulation.

13. Write a Business Plan

Whosoever said you don’t need a formal business plan to start or expand your credit and card issuing business is surely not addressing you who need funds from creditors and investors. Like many successful businesses have done in time past, you can start your credit and card processing without the benefit of a formal business plan—but this applies only if you have all the funds you need or you are just testing the business waters to see how it turns out.

When starting a credit and card Issuing business you need a well-written business plan that shows you have really done your homework. And if you are planning to expand an already started credit and card processing business, it demonstrates that you have carefully considered the pros, cons and odds; and focused on the development of your business.

If you are risking your capital, time, resources and effort to start the business; then you certainly need a business plan to help you mitigate against the risk involved. If you are already a business owner but you started out without a business plan, then you definitely need to invest in getting a business plan; especially if you want to take your business to the next level.

You may need to present your business plan to the bank to show them how you intend to operate, your future plans/visions for your business, how you intend to beat your competitors and how you will handle inherent risks.

One of the most common risks of the credit card processing business is its susceptibility to fraud. You need to be able to show the banks you intend to work with, as well as your clients that you are fully prepared to prevent and tackle cases of fraud.

14.  Do a Detailed Cost Analysis

A credit card processing company helps businesses to process payments made by their customers. To start a credit card processing business, you will need to supply your clients with the necessary gadgets with which they would process payments.

You would also provide a means by which such payments can be sent to the customers’ bank for approval and then credited into your clients account. The detailed cost or expenses of starting a credit and card processing business may include

  • Credit card machines – $600
  • Rent and lease – $1500
  • Bank account – $2500
  • Hiring of competent staff – $1500
  • Registration (legal structure, EIN etc.) – $1200
  • Insurance – $2000
  • Marketing and other logistics/miscellaneous – $2300

From our well detailed cost analysis above, it is believed that $11,600 will be needed to start a small scale credit card issuing business with private label. A medium scale credit and card processing business is envisaged at $58,000 and starting a large scale credit card issuing business at $464,756.

15. Raise the Needed Startup Capital

Most businesses need outside funding, but many entrepreneurs don’t know where to find it, or how much to ask for. Whether you need loans, small business grants, angel investors, venture capital, crowd funding, or investments from friends and family, you can greatly improve your chances of securing business capital. Ways of financing your credit and card processing business may include:

  • Personal savings
  • Pitching
  • Angel investor
  • Partnership
  • Venture Capital
  • Loans and grants
  • Alternative funding source like Crowdfunding

16. Choose a Suitable Location for your Business

A business owner has many issues: funding, staffing, developing a marketing strategy and ensuring that they have a viable product or service. Before beginning the process of starting a business, however, there is one important decision that you must make: where to start the business.

Many times, the location of the company is decided based on what is good sense for the entrepreneur, with little thought or regard paid to the location of the company. While it is nice to think, “If I build it, they will come!” the reality is that the company that uses the motto, “If I build it where they are, they’ll come” may, in the end, be more successful.

A variety of features will affect what makes a location suitable or not suitable for your credit and card processing business, and the wise entrepreneur will examine those features carefully before deciding to move forward with a venture. A suitable location for your credit card issuing business must have the following;

  • Fund access
  • Tax and legal incentives
  • Office costs
  • Staffing needs
  • Social amenities
  • Access to incubator programs

17. Hire Employees for your Technical and Manpower Needs

In starting this business you will need enough manpower depending on the size and scale of the business. Hire salesmen who have knowledge about credit card processing and credit card machines to make contact with potential clients. You can pay salesmen with commission, plus a base salary.

You can also hire installation personnel to set up the machines you are providing to your client and you would also need some technical staff to help maintain and service the machines whenever they are faulty. As you grow, you may hire more employees to help you with your company’s finances and sales needs.

Taking credit card payments requires you to sign an agreement to uphold the Payment Card Industry Data Security Standards, commonly known as PCI requirements. Any method will require some vigilance, like making sure payment hardware and software is secured, but some will be more security-intensive than others.

For instance, using a card imprinted will require that you document and enforce procedures for handling and subsequently destroying imprinter slips, while using a terminal or online payment method—which makes it harder for anyone to get at credit card information—requires less of a security effort.

Violating the PCI requirements can result in a substantial fine and the loss of your ability to accept credit card payments. If the information gets into the wrong hands, you also risk losing your constituents’ trust.

The Service Delivery Process Involved

Weighing your options for Issuing credit card payments requires a basic understanding of how the system works. The multiple steps are complex, and can involve a number of different vendors and entities. That’s how it works—but how do you start actually taking credit card Issuance? There’s a wide variety of methods, each appropriate to different situations.

  • Credit Card Imprinting Machines
  • Bank processing
  • Credit Card Terminals
  • Mobile devices
  • Swipe hardware
  • Virtual terminals
  • Online Payment Processors
  • Payment Enabled Software
  • Point of Sale solutions

18. Write a Marketing Plan Packed With ideas & Strategies

It is a long, arduous process to find the perfect strategies for increasing your credit card Issuing  services business and making profits. If you want to increase your market share, finding the best methods to do so is essential, but often difficult. After you know which strategy work best, it’s important that you get them working for you as soon as possible. The marketing strategies below are proven ways to market a business successfully.

Before making strategic decisions, it’s wise to conduct methodical and detailed risk analysis to avoid major financial disaster. Even rock-solid businesses could encounter issues if risk-taking goes wrong. Make sure to take every little chance to decrease your risk since large risks carry with them large potential for ruin.

All important credit card processing services business decisions ought to be closely followed by a thorough risk analysis, so that every possible outcome is considered and the most appropriate choice is made to protect the credit card merchant services company’s economic feasibility.

Building a new credit card issuing  services company is extremely challenging, despite it is your first credit card Issuing  services business or if you have done it many times prior to. You need to understand everything about the business you are about to start and about your competitors.

Devising well thought out strategies for enactment in the creation of a lucrative enterprise is smart and will benefit you. Do not underestimate the wealth of findings and examples you could locate from the World Wide Web.

Credit card business moguls concur that the most result effective way to become an industry leader is to learn as you earn. Learning through doing is really the most effective way for mastering basic credit card processing services business principles.

You could take all the knowledge you acquired while working and apply that to your own business down the road. Although business books are popular, most do not provide any ground breaking information that you can’t obtain more effectively when you really do the work yourself.

To impress visitors and present a professional image, businesses need to construct breath taking websites. Hire a popular website designer to create your website if you are not able to do it yourself. Your site’s success is dependent on quality content and attractive design and imagery. You should never forget how important it is for you to get online so be certain that your credit card processing services business has a good presence online.

Often if you extend the best possible client service to clients you will see that is enough to have them keep coming back to your business. It is very bad and detrimental if you do not have a stable policy on retaining and delighting your clients each time they arrive to your credit card processing services business because they’re going to go elsewhere.

A sure fire way to keep clients, even if your business evolves into new areas, is to stay consistent with good client service. You business foes will look for methods to get to your clients by offering promotional enticements and better performing inventory items. Going online to get additional tips could be a good idea.

19. Work Out a Reasonable Pricing for your Services & Products

Credit card issuing companies use four primary pricing strategies, including the following. Knowing this can help you better understand how fees are calculated and how to set your own fees.

  • Flat Rate Program-:The processor sets one high rate to cover all card types, so ultimately the processing company makes a greater sum of money off cheaper cards.
  • ERR Rate Program-: The merchant receives a low rate on card transactions, usually below 2 percent.
  • Three-Tiered Rate Program-: Of all pricing strategies, this is the most popular, but also the most complex. Processors lump all of the 150 interchange categories into Qualified, Mid-Qualified, and Non-Qualified, with Qualified offering the lowest rate.
  • Interchange Plus Program-: The merchant is charged pure interchange fees as well as a discount rate. As a result, the processor is compensated but as the merchant, you know the exact amount.

You can also provide a monthly service that ensures the transactions your client makes are going through, including installation and repair services. Your prices may vary from $10 to $50 per month, depending on the scope of services you provide. The other option available is to charge a percentage of every transaction that goes through plus a fixed price for the machine. Your prices may also vary according to the amount of time a transaction takes to go through.

20. Develop Iron-clad Competitive Strategies to Help You Win

To be successful, a company must do a better job than its competitors of satisfying target consumers. This is competitive advantage and it is about winning target customers and retaining them. In order for an organization to be able to gain competitive advantage over its competitors, the organization must first analyse and understand its internal and its external environment. Ways of winning competitors in the said business may include

  • Listen to gossips
  • Let the leads come to you
  • Outsmart your competitors
  • LinkedIn poaching
  • Establish a relationship with as many banks and financial institutions as you can
  • Choose a niche

21. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity

The competition in the credit and card processing business is based on getting and retaining customers. The customers who keep coming back to your business are your most valuable assets. The most loyal 15 percent of customers account for 55 to 70 percent of total sales.

Making sure they stay happy is the secret to a sustainable and highly profitable business. In other to retain your customers in your credit and card processing business, you have to:

  • Provide Exceptional Customer Service
  • Use email marketing
  • Ask the ultimate question
  • Romance them
  • Show off your strength
  • Create a system for complaints
  • Develop an Outstanding Product or Service
  • Do small favours

Strategies to Boost Brand Awareness and Create a Corporate identity

Brand affinity and awareness is the only way potential customers know who you are and what you do. Without it, your company can toss its snazzy content marketing out the window. Successful brand awareness is more than simple name recognition. It also requires that consumers know what you do on the most basic level. Ways to increase customer retention includes

  • Begin by creating a few reliable credit card processing lead sources
  • Pitch your clients
  • Follow up with your customers
  • Build a “pipeline” of prospects
  • Good marketing

22. Create a Supplier /Distribution Network

Due to the many regulatory requirements levied on businesses, the modern credit card processor is usually partnered with merchants through a concept known as software-as-a-service (SaaS).

SaaS payment processors offer a single, regulatory-compliant electronic portal that enables a merchant to scan checks (often called remote deposit capture or RDC), process single and recurring credit card payments (without the merchant storing the card data at the merchant site), process single and recurring ACH and cash transactions, process remittances and Web payments.

These cloud-based features occur regardless of origination through the payment processor’s integrated receivables management platform. This result in cost reductions, accelerated time-to-market, and improved transaction processing quality.

Electronic payments are highly susceptible to fraud and abuse. Liability for misuse of credit card data can expose the merchant to significant financial loss if they were to attempt to manage such risks on his own. One way to lower this cost and liability exposure is to segment the transaction of the sale from the payment of the amount due.

Many processing businesses offer subscription services, which require payment from a customer every month. SaaS payment processors relieve the responsibility of the management of recurring payments from the merchant and maintain safe and secure the payment information, passing back to the merchant a payment “token” or unique placeholder for the card data.

Through Tokenization, businesses are able to use this token to process charges, perform refunds, or void transactions without ever storing the payment card data, which can help to make the merchant system PCI-compliant.

Another method of protecting payment card data is Point to Point Encryption, which encrypts cardholder data so that clear text payment information is not accessible within the merchant’s system in the event of a data breach. Some payment processors also specialize in high-risk processing for industries that are subject to frequent chargebacks, such as adult video distribution.

The typical network architecture for modern online payment systems is a chain of service providers, each providing unique value to the payment transaction, and each adding cost to the transaction: merchant ↔ point-of-sale (PoS) software as a service (SaaS) ↔ aggregator ↔ credit card network ↔ bank.

The merchant can be a brick-and-mortar outlet or an online outlet. The PoS SaaS provider is usually a smaller company that provides customer support to the merchant and is the receiver of the merchant’s transactions. The PoS provider represents the aggregator to merchants.[citation needed].

The PoS provider transaction volumes are small compared to the aggregator transaction volumes, so a direct connection to the major credit card networks is not warranted, because of the low traffic. Additionally, the merchant does not handle enough traffic to warrant a direct connection to the aggregator. In this way, scope and responsibilities are divided among the various business partners to easily manage the technical issues that arise.

23. Tips for Running a Successful Credit Card Issuing Company

Handling other people’s problem can be tiresome and frustrating, but this business is a lucrative one and to run it successfully you will need to do the following:

  • Be cautious and reliant
  • Learn as much as you can about credit and card processing
  • Understand your role in the process
  • Develop a business plan
  • Work smart and minimize your time spent working
  • Understand how to market your business
  • start small and work out kinks before expanding too quickly
  • Be simple and strong
Ajaero Tony Martins