Module 18: Understanding the Full Value Chain of Virtual Cards
🧠 Learning Objectives
By the end of this module, you will:
Understand the complete lifecycle and ecosystem of a virtual card
Identify all the players involved: from issuer to cardholder
Know how value, cost, and compliance move through the card stack
Clarify where your product sits — and how to work with or around each layer
Gain the language and perspective to engage issuers, processors, and partners with confidence
Why This Matters
Many teams try to build card products without truly understanding how the infrastructure is stitched together. This creates:
Misaligned expectations (e.g., “Why can’t I support crypto merchants?”)
Integration delays (“We didn’t realize we needed KYC at this layer”)
Business model mismatches (“We didn’t know where the fees actually go”)
Risk and compliance gaps
Understanding the value chain gives you the clarity to build confidently — or to explain why you can’t build a certain feature (yet).
The Full Card Ecosystem: High-Level View
At the highest level, a virtual card product connects:
User (Cardholder) ↓ Frontend or App (Your Product) ↓ API Layer (Bitnob, Marqeta, or your integration) ↓ Card Processor ↓ Card Issuer (licensed bank or fintech) ↓ Card Network (Visa, Mastercard, Verve) ↓ Merchant + Acquirer
Let’s walk through each part and what role it plays.
1. The Cardholder
This is your user — the person or business trying to spend. Your job is to manage:
Identity (KYC, verification)
UX (card controls, balances, top-ups)
Support and dispute handling
Limits, terms of service, and legal ownership
The cardholder does not interact directly with most of the other entities.
2. The Product Layer (You)
This is where you sit — as the issuer of experience, not the issuer of the card.
Your product is responsible for:
UX: Creating, funding, freezing, and showing the card
Policy: Who can get a card, what fees are charged
API integration: Top-ups, transaction logs, webhook handling
Customer education, marketing, and positioning
You may be white-labeled under a licensed issuer, but you own the user relationship.
3. The API Layer or Issuance Platform
Examples: Bitnob, Marqeta, Lithic, Union54, Interswitch APIs, card modules from global processors.
This layer handles:
Card creation and management
Abstracting compliance requirements from you
Routing funding to the correct issuer accounts
Communicating with processors and card networks
Delivering webhooks and real-time status
They bridge your app with the licensed infrastructure, letting you focus on product, not compliance.
4. The Card Processor
Examples: Galileo, Interswitch, Qolo, Marqeta (also acts as issuer), Thales, FIS.
The processor does the heavy lifting of:
Managing card state and lifecycle
Performing authorization checks
Routing requests to networks (Visa, Mastercard)
Calculating spend limits, validating merchant categories
Recording transaction history
They are the transaction execution layer.
5. The Card Issuer
This is a licensed bank or regulated financial institution that is authorized to issue Visa or Mastercard products.
Their responsibilities include:
Holding and managing the cardholder’s funds
Owning the BIN range (the first 6–8 digits of the card number)
Ensuring compliance with scheme rules and local regulation
Reporting to regulators and being audited
Handling chargebacks and network disputes
You cannot issue cards directly unless you are an issuer or operating under one.
6. The Card Network
Visa, Mastercard, Verve, UnionPay, etc.
Their role is to:
Connect issuers to acquiring banks
Route transaction authorizations across borders
Enforce global rules (like MCC bans, FX charges, chargeback resolution)
Govern BIN assignments, interchange fees, and settlement standards
They are the backbone of global card interoperability.
7. The Acquirer and Merchant
On the other end of every transaction is a merchant (e.g., Netflix) and their acquiring bank (e.g., a U.S. acquirer).
This layer:
Accepts the card
Charges the transaction amount
Settles with the merchant after authorization
May introduce FX fees, MCC metadata, or fraud triggers
You don’t control this layer — but it heavily impacts how your cards are used and how users experience your product.
How Value Flows
Every dollar spent through your card goes through this chain:
Cardholder → You → API → Processor → Issuer → Network → Merchant → Acquirer
Every dollar also incurs cost and revenue at different stages:
| Stakeholder | How They Earn |
|---|---|
| You | Top-up fees, card fees, FX markup, subscription fees |
| API Layer | Per-card or per-transaction platform fees |
| Processor | Authorization fee, card management fee |
| Issuer | Interchange, dispute fees, float interest |
| Network | Cross-border fee, scheme fee, dispute fees |
| Merchant | Revenue (but pays acquirer fees, network fees) |
Where You Have Control
| Area | Can You Control It? |
|---|---|
| Card lifecycle (active, frozen, terminated) | Yes |
| Who gets a card | Yes |
| How funds get onto the card | Yes |
| Merchant approval/decline | No |
| Cross-border fees | Not directly |
| MCC restrictions | Sometimes (issuer-enforced) |
| Refund/refund timing | No, but you can track and inform |
| Issuer choice | Not unless you’re a platform provider |
Risks Across the Value Chain
| Risk | Where It Originates |
|---|---|
| Declines for valid users | Merchant acquirer, issuer, or MCC rules |
| FX and cross-border surprise charges | Card network routing |
| Refunds delayed or lost | Merchant/acquirer side |
| Chargeback loss | Issuer and network |
| Fraud patterns | Cardholder behavior, your product setup |
You must build resilience and education into your product, even when you don’t control the problem.
Recap
Virtual card products depend on a multi-layered value chain: user → product → API → processor → issuer → network → merchant
Knowing where you fit helps you design better, communicate better, and troubleshoot smarter
Cost and control are unevenly distributed — but responsibility for the user experience always falls on you
Learn to operate within this chain confidently, and your card product will outperform 90% of others in your space
