For years, competition between digital lenders revolved mainly around interest rates. That era, however, is coming to an end. The market is saturated, customer acquisition costs keep rising, and borrower expectations continue to shift. The cost of capital still matters, of course, but the speed of access is becoming just as important.
The traditional workflow – submitting an application, getting approved, and then waiting several days for a bank transfer – no longer cuts it, because modern borrowers view delay as friction, and friction as a reason to churn.
This shift is now visible in the structure of lending products themselves, and you can think of it as a move from “payout-to-account” to “payout-to-card”. Lenders are embedding virtual and physical cards directly into their products and, by doing so, they’re not only accelerating disbursement. It’s also about gaining better control over how funds are used and turning a one-off transaction into a broader financial relationship.
The Margin Squeeze
Because lenders are fighting over the same borrowers in everything from SME loans to consumer credit, the pressure to innovate is as financial as it is operational. Just recently, the European Central Bank pointed to tighter margins and limited room to raise prices in already competitive loan markets.
In other words, if you’re lending money, you can’t really compete on price, so you have to compete on product – and the most valuable product feature today is instant liquidity.
The “Need for Speed” Is Not Just a Slogan
The data is clear: speed is now a primary decision factor for borrowers. A PYMNTS Intelligence study last year found that 77% of consumers would choose instant payments for disbursements when given the option, a reminder that immediacy is no longer a bonus feature so much as an expectation.
With that in mind, it’s not difficult to see why traditional methods of transferring money can become a liability. They introduce a zone between approval and usage where excitement fades and anxiety builds.
By embedding financial features and cards directly into their product, lenders can now bypass this point of friction. They can issue a virtual card the moment a loan is approved and push funds immediately. On the borrower’s side, the card can be added to a mobile wallet and used within seconds. What you eliminate is the “waiting game”, while the customer experience shifts from administrative to immediate.
From “Fire and Forget” to Precise Control
Speed wasn’t the only issue. Apart from being slow, traditional transfers suffered from a lack of control. Once funds left the lender’s account, visibility was lost, and this was particularly risky for specific-use lending products like home renovation loans, medical financing, or insurance payouts.
Embedded cards introduce a layer of programmable logic that solves this problem as well. Lenders can simply issue single-use or limited-use cards with strict Merchant Category Code (MCC) restrictions.
For example:
- Renovation loans: restricted to hardware stores, contractors, and home-improvement retailers.
- Medical loans: locked to healthcare providers and pharmacies.
- Insurance payouts: ring-fenced for specific repair shops or replacement services.
This significantly reduces fraud risk, because such restrictions ensure capital is used for its intended purpose. At the same time, borrowers get a seamless payment method while lenders protect their risk models
The Business Case: Revenue Beyond Interest
But perhaps the most compelling argument for embedded cards is the revenue model. When a lender disburses via bank transfer, they pay a fee. When they disburse via their own white-label card, they earn revenue.
By capturing the interchange fee on every transaction made with the loan funds, lenders open a secondary revenue stream that complements their interest income. This aligns with broader market forecasts: Juniper Research projectsthat the modern card issuing platforms market will grow by 148% between 2024 and 2028, driven largely by platforms realising they can monetise the payment flows they already originate.
Turning Borrowers into Cardholders
Finally, there’s the issue of retention. A loan is traditionally purely transactional: the borrower takes the money and disappears until the repayment is due.
An embedded card changes this dynamic. It places the lender’s brand in the customer’s physical or digital wallet. If the card product is robust – offering features like rewards, cashback, or a credit builder function – it can remain in use long after the initial loan principal is spent. In other words, it can turn a one-time borrower into a recurring user, lowering the need to re-acquire that customer for their next financial need.
How to Embed Cards Into Your Product in Weeks
For a long time, the obstacle to this model was complexity. Lenders are experts in credit risk, not payment processing, and building a card-issuing stack in-house meant acquiring licences, building fraud engines, and managing complex scheme compliance.
This is where solutions like Wallester White-Label change the equation.
We provide the complete, licensed infrastructure for lenders to embed Visa cards directly into their products without dealing with the regulatory burden. As a Visa Principal Member, Wallester handles issuance, processing, and compliance (KYC/AML) on in-house infrastructure.
Through our API, lenders can:
- instantly issue branded virtual and physical cards upon loan approval
- set granular spend controls and merchant restrictions in real time
- launch in weeks with fully compliant European BINs
The lending market is evolving, and it’s critical to keep up. Thanks to solutions like Wallester White-Label, lenders are moving from being simple sources of funds to providers of instant, seamless financial capabilities – and it’s all deployable in weeks.
Interested in embedding cards into your lending flow?
