By Rene Philippe Raymond Dubout · · Updated Every fintech founder wants a card with his logo on it. It is the most visible product in payments, and clients use it every day. The question I hear is always the same: should we become a principal member of Visa or Mastercard, or go through someone else’s licence? The answer depends less on ambition than on three numbers: your licence status, your volumes and your patience.
Two ways to put a card in your client’s wallet
Principal membership means a direct contract with the card scheme. You hold your own BIN ranges (the first digits of the card number that identify the issuer), you settle directly with the scheme, and you carry the scheme obligations yourself. Visa and Mastercard both call this principal membership, with slightly different categories for the smaller members they sponsor.
BIN sponsorship means that a licensed institution that is already a principal member, a bank or an EMI, issues the cards on its BIN, under its membership, while you run the programme as programme manager: your brand, your app, your clients. Most card fintechs you know started this way, and many never left it.
Who can become a principal member?
The schemes do not sign with just anyone. In practice, you need a regulated institution that is allowed to issue payment instruments or acquire transactions: a bank, an electronic money institution or a payment institution with the right permissions. In the European Union, the payment services rules require card schemes to give licensed payment and e-money institutions fair access, which is why EMIs can become principal members at all.
Without a licence, you cannot apply. A Swiss SRO company, an EMD agent or an unlicensed startup has to use a sponsor. That is not a weakness to hide; it is simply the order of things.
What principal membership involves
- Issuing, acquiring, or both. An issuing licence lets you issue cards; an acquiring licence lets you process card payments for merchants. They are separate applications with separate requirements.
- A region at a time. Applications are made per scheme region (Europe, Asia-Pacific, Middle East and Africa, Latin America and the Caribbean, North America), usually starting with the region where you are licensed. You can hold a direct membership in your home region and use sponsorship elsewhere.
- Financial strength. The schemes assess your capital and your risk, and usually ask for a security deposit or collateral that varies with the region, the product and your profile.
- Technical readiness. You need a certified issuer processor or acquiring processor, card manufacturing or tokenisation for digital cards, fraud monitoring, PCI DSS compliance and scheme reporting.
- Time. Count six to ten months from a complete application to the first live card, and longer if your licence or your processor is not ready.
In other words, principal membership is not a product you buy. It is a function you build, with people, systems and money behind it.
Principal or sponsored: the comparison
| BIN sponsorship (programme manager) | Principal membership | |
|---|---|---|
| Licence needed | No: the sponsor holds it | Yes: bank, EMI or payment institution |
| Time to first card | A few months | Six to ten months, often more |
| Up-front cost | Lower: set-up fees to the sponsor and processor | Higher: scheme fees, collateral, processor, certification, staff |
| Economics | The sponsor takes a share of the interchange and charges per card or per transaction | You keep the interchange and negotiate directly with the scheme |
| Control | The sponsor approves your products, clients and marketing | You decide, within the scheme rules |
| Dependency | If the sponsor exits, your programme must migrate | Your own membership; no landlord |
Which route for you?
Here is the rule of thumb I give clients. If you do not hold a licence, the question does not arise: start with a sponsor. If you hold a licence but your card volumes are still small, start with a sponsor anyway and keep your capital for growth; the scheme membership will still be there next year. If you hold a licence, your volumes are real and the sponsor’s share of the interchange has become a serious line in your accounts, then principal membership pays for itself, and it is time to apply.
The mistake I see most often is the founder who wants principal membership on day one, for prestige, before he has a single client. He spends a year and a small fortune building card infrastructure for clients he does not yet have. Buying a Ferrari to learn to drive is a fine idea only if someone else is paying for the crashes.
The route we recommend
FintechLex helps you choose between sponsorship and principal membership, find a sponsor that accepts your model and your clients’ countries, and, when you are ready, prepare the scheme application for your region. If you need the licence first, we also have EMIs for sale, already licensed, which is often the fastest way to become eligible. Tell us what cards you want to issue, for whom and where, and we will tell you which route fits, before you spend a franc. Write to insight@fintechlex.com, or see the EMIs currently for sale in our Marketplace. If you are not licensed yet, read our article on the EMD agent route first, and for the licence itself, our EU EMI licence guide.
If you need an EMI licence or want to buy a licensed EMI, see our EMI licence and EMI acquisition service.
This article is for general information only and does not constitute legal advice. Visa and Mastercard are trademarks of their respective owners; FintechLex is not affiliated with either.
Sources
- Directive (EU) 2015/2366 (PSD2), Article 35 (access to payment systems for authorised payment and e-money institutions).
- Visa Core Rules and Visa Product and Service Rules, and Mastercard Rules (membership categories, regional licensing, sponsorship), public versions.
- PCI Security Standards Council, PCI DSS (data security requirements for card issuers and acquirers).
