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A new report from Mastercard, payments processor Paymentology, and digital banking solutions provider audax has highlighted the growing significance of Cards-as-a-Service (CaaS) in transforming the digital payments landscape.
The global payments processing market, currently valued at $55 trillion, is projected to reach $79 trillion by 2029, growing at an annual rate of 7%. With this in mind, the traditional card issuance process is expensive, demanding large teams and lengthy, complex timelines—sometimes taking up to two years—for creation and distribution. It also relies on heavy legacy infrastructure, from payment processing systems to data centres.
The CaaS model allows banks and financial technology groups to become distributors of payment services across various sectors through cloud-based infrastructure.
These platforms provide comprehensive card issuance, management, and transaction processing infrastructure via APIs, enabling financial institutions to integrate these services directly into their existing systems without building the underlying technology themselves.
The platform handles all critical functions including instant card issuance (both virtual and physical), transaction processing, compliance, fraud prevention, and risk management while offering customisation options like white-labeling and personalized card programs. The CaaS model provides scalability and global reach along with robust data analytics capabilities, allowing issuers to expand their card programs, enter new markets, and gain insights into customer behaviour without significant infrastructure investment.
Early adopters of the technology have reported reducing their time-to-revenue by up to 50% compared with traditional methods. The system enables financial institutions to launch card programmes within days rather than weeks, while simultaneously reducing operational overhead.
“CaaS is not just a new model; it’s a strategic imperative,” said Merusha Naidu, global head of partnerships at Paymentology. The company has partnered with audax, which is backed by Standard Chartered, to develop a comprehensive CaaS platform.
The Asia-Pacific and Latin American regions are leading adoption, with the Middle East emerging as a significant market for innovation. Industry executives say the technology is particularly appealing in regions with rapidly developing financial infrastructure.
The report suggests that financial institutions implementing CaaS can better position themselves to capture new revenue opportunities while maintaining competitive advantages in an increasingly digital marketplace. However, the success of such initiatives largely depends on establishing effective partnerships with technology providers and payment networks.
Mastercard’s Gaurang Shah, executive vice president of product and engineering for EEMEA, describes CaaS as “a game-changing approach” to card issuance, particularly as demand grows for flexible, digital-first solutions.
In contrast with CaaS, the traditional card issuance process begins with customer application and internal evaluations, followed by the issuer processor managing backend processes. Once approved, the card undergoes network validation and physical personalisation with security features before being shipped to the customer for activation. After activation, the issuer processor manages the card’s entire lifecycle while coordinating with acquirers and card networks.
Emerging technologies are being incorporated across the payments landscape, from the importance of blockchain and distributed ledger technology (DLT) for instant settlements and cross-border payments, to the adoption of central bank digital currencies (CBDCs) around the world. The development of CaaS, the report concludes, is a necessity in this environment.
