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How to Switch Issuer Processors

How to Switch Issuer Processors

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If you’ve outgrown your issuer processor or you’re unhappy with the services they provide, it may be time to make a switch. 

You may be eyeing advancements in transaction processing, enhanced security measures, or better support for emerging payment methods. 

At Lithic, we understand that switching issuer processors seems daunting. The good news is that you can minimize customer disruptions by taking a strategic and considered approach. 

Here are a few questions to ask yourself as you consider your options:

  1. What are you solving for? 
  2. What’s your plan for your existing programs? 
  3. What is your target timeline? 
  4. How much support will you need from your current issuer processor?
  5. What are your ledgering needs? 
  6. Handling PCI compliance.

Let’s look at each of these in more detail.

[Note: We’ve prepared a step-by-step guide to switching issuer processors — scroll down for access!]

1. What are you solving for? 

What functionality are you trying to unlock with a new processor?  What services are you looking to receive or provide (e.g., product/service capabilities, processor only vs. program manager)? How much does pricing matter to you?

For guidance on choosing a new issuer processor, check out our guide and learn why observability, flexibility, and control make developer-first issuer processors the best choice for building and scaling innovative, future-proof card programs.

2. What’s your plan for your existing programs?

We generally see our customers follow one of two paths. 

  1. Path One: Launch a new program with your existing bank (or a new bank) and switch processors by gradually shifting transaction volume over. This approach involves setting up a new BIN with your bank.  
  2. Path Two: Keep your existing program in-market (with your existing bank) and switch processors. Under this model, you’ll need to transfer your BIN(s) from one processor to the other. 

Consider which approach works best for your needs. 

3. What is your target timeline? 

What’s your target timeline, and what’s driving it? Understanding and managing expectations around timing is critical.

If you have a hard date by which you must complete the switch, make sure to communicate this to prospective issuer processors and work with your stakeholders to surface dependencies.

You’ll also need to avoid planned network freezes when picking a target migration date. 

4. How much support will you need from your current issuer processor? 

Depending on how you structure your switch, you may need extensive support from your existing issuer processor. The more cooperative they are, the easier a transition will be. 

For instance, if your current issuer processor isn’t cooperative, you may have to close existing cards and reissue them under a new BIN with the new issuer processor.

You may also need your current processor's support to transfer customer data–-especially if you’re not PCI compliant. 

In our guide, we go into detail on how best to work with your existing processor to facilitate a smooth transition. 

5. What are your ledgering needs?

Consider your ledgering needs as you evaluate prospective issuer processors. 

Whose ledger are you using — your existing processor’s ledger, your own, or a third party’s — and whose do you plan to use after you’ve made the switch? 

Does your prospective issuer processor have a native ledger that you can leverage, or integrations with third-party ledger providers? 

6. Handling PCI compliance

Regulations abound in fintech, and PCI compliance is one of the most critical processes within the sector. 

Depending on how you structure your switch, you may need to transfer sensitive customer data between processors.

If you are currently PCI compliant, you can handle customer data yourself. If not, you need your current issuer processor to help transfer it to your new one. 

Recognizing this dependency is critical since it will help you define how much support you need from your current processor when you draft and execute your migration plan.

The key steps in your issuer processor migration plan

At a high level, here are the eight steps involved in executing an issuer processor switch:

  1. Choose a new issuer processor
  2. Notify your bank
  3. Notify your existing processor
  4. Create a migration plan
  5. Understand and plan for customer impact
  6. Transfer customer data
  7. Transfer or set up a new BIN
  8. You’re ready

To go deeper into each of these, read our step-by-step guide to switching your issuer processor – and reach out to a payments expert to chat.