Credit, debit, or prepaid cards are the cornerstone of modern-day finance. Card offerings are most lucrative for fintechs, neobanks, and credit unions – all of which benefit greatly from card programs. A card program generates reliable revenue streams, including transaction fees and interest.
In 2023, four of the largest card networks processed close to $25 trillion in consumer transactions globally. But how can a business generate reliable revenue opportunities by issuing cards through a card program? If you are looking for some answers to understand just that, then this article is for you. Below, we’ll cover both direct and indirect revenue opportunities from card issuance.
Interchange fees, also known as swipe fees, are a direct and reliable revenue stream for card issuers. The card issuer earns a small fee after each successful transaction as part of the payment processing cost, which is paid by the merchant’s bank. Through this fee, the card issuer covers processing, fraud protection, and other network services, but, more importantly, this stream provides non-interest income.
Interchange fees can range from roughly 1% to 3%, depending on the specific card network, card type, and transaction method, because some networks and card products have higher rates while others have lower ones. This range can also vary by region. The difference in a few points may not seem big, but it can affect costs, especially when transaction volumes or values are high. For example, the average Visa/Mastercard credit card interchange fee was about 2.3% in 2025.
From a strictly financial standpoint, the scale of interchange revenue is huge. In the U.S., $34 billion in interchange fees was collected in 2023. And each year, credit card interchange adds tens of billions to issuers’ coffers because it attracts higher per-transaction fees than debit cards.
Even though there are caps for larger banks at $0.21 + 0.05%, it is one of the few scalable revenue streams that flourishes with transaction volume. Chime, one of the leading neobank, reported $600 million in earnings from interchange fees in 2020.
Card issuers don’t rely solely on earnings from card networks but also on fees charged directly to cardholders, including annual fees, service charges, and even penalties.
Not every card program may have all these fees, but they are a good direct revenue opportunity when deployed strategically:
Annual fees are charges that card issuers impose on cardholders and are common on premium or rewards cards. Charges can vary by service and range from $20 to $50 for cards with basic perks. In recent years, annual fee volume has more than doubled, rising from $3 billion in 2015 to $6.4 billion in 2022, as consumers increasingly opt for premium rewards cards.
Cardholders with high credit are willing to pay even $100, and more, for better rewards and perks. For card issuers, this upfront revenue stream helps them cover the burden of rewards and other account services.
Penalties for missteps and card usage can be a significant part of revenue for card-issuing businesses. Fines and interest on missed due dates are a significant portion of the charges levied by card issuers. In 2022, issuers collected $14.5 billion in the U.S. alone. Typically, the late charge is $25-$40 per incident, and throughout the years have been the largest fee category by dollar amount and frequency on credit cards.
Other penalties and usage fees include:
Financial institutions and credit unions may charge a monthly maintenance fee on deposit accounts with an issued debit card. An inactivity fee on prepaid cards is usually part of these accounts to remain profitable.
For standard accounts, issuers usually don’t charge a monthly maintenance fee; they charge premium account tiers that offer extra benefits.
Interest on balance amount is the largest revenue component for card issuers. Credit cards function as revolving loans, and when a cardholder carries their balance past the grace period, they incur interest on the outstanding amount.
Compared with other financial products, credit cards carry higher interest rates because they are unsecured. The average credit card APR is around 20%, so interest quickly accumulates when there’s a payment delay. Interest income is categorized as interest earnings from loans and dwarfs many other revenue streams.
Large U.S. banks collectively take in tens of billions in credit card interest each quarter. From 2018 to 2020, consumers paid roughly $120 billion annually in credit card interest and fees, interest constituting the majority of that sum.
Interest rates are rising as well. In 2015 and 2019, the average assessed credit card interest rate in the U.S. jumped from 13.7% to 16.9%, and it has increased further ever since. Each percentage point increase directly boosts issuers’ yield on their card loan portfolios.
Interest revenue is a direct function of cardholder behavior (carrying a balance) and credit risk management. Issuers encourage some revolving behavior by offering flexible payment options, while also managing risk through credit limits and underwriting. The profit from interest must be balanced against credit losses (delinquencies), so prudent issuers pay close attention to portfolio quality. Nonetheless, interest margin on revolving debt is extremely high compared to mortgages or auto loans, making credit cards a top contributor to many banks’ profitability. For fintechs that started with debit cards, offering a credit product can open a new stream of interest income, albeit with greater regulatory and capital requirements.
Beyond the direct streams of fees and interest, card issuance opens the door to indirect revenue opportunities through cross-selling. A payment card often serves as an entry-point product that can aggravate a customer’s relationship with the institution. Issuers can analyze cardholders’ spending patterns and financial requirements to offer additional products and services. It helps increase the overall customer lifetime value. Cross-selling doesn’t generate revenue from the card itself, but leverages the cardholder base to drive sales of other profitable offerings.
For traditional banks, a credit or debit card customer can be cross-sold into deposit accounts, loans, mortgages, insurance, or investment products. An existing customer who trusts the institution is far more likely to take up another product, and marketing to them is cheaper and more effective. In fact, industry data show that the return on marketing investment for selling to existing customers can be 10 times that for acquiring new customers. Cross-selling not only brings in new revenue but also improves retention, since a multi-product customer is less likely to leave.
It’s not unusual for a successful cross-sell program to double a customer’s lifetime value to the institution. In practice, this means a cardholder who also has a personal loan, a savings account, and a brokerage account with the issuer will generate far more combined revenue (and remain loyal longer) than a card-only customer.
Card-focused fintechs and neobanks do this by offering a “hook” product, such as a high-reward credit card or a fee-free debit card, and then expanding into new services. And here the payments data itself helps identify customer needs: frequent travel spend could trigger an offer for a travel loan or premium travel card, large purchase transactions could prompt installment financing offers, and so on.
Even offering multiple card types can be a cross-sell strategy. A recent study found that issuers offering a full suite of cards (debit, credit, prepaid) are 3.5 times more likely to achieve high customer lifetime value than single-product issuers.
Issuers successful in this area use cardholder data (with the cardholder’s permission) to tailor offers. Roughly about 42% of companies use their loyalty or rewards programs specifically to cross-sell additional products and services.
In the digital age, the data generated from card transactions has itself become a valuable asset. Every swipe or tap yields information on where, when, and how consumers spend money. Card issuers that own this transaction data can monetize it in various ways. The simplest internal use of data is to improve risk models, underwriting, or personalization, which, in turn, increases revenue by reducing fraud losses and increasing customer satisfaction. Beyond that, issuers are now actively turning data into a direct revenue stream through analytics services and partnerships.
One avenue is partnering with merchants and marketers to provide card-linked offers or targeted promotions. For example, some banks partner with fintech platforms (such as Cardlytics) that analyze consumer spending and deliver location- or category-specific offers to cardholders. When the cardholder takes an offer (such as cash back for shopping at a certain retailer), the retailer pays a commission or fee, which is shared with the issuer. This effectively monetizes the issuer’s spending data for advertising.
Issuers can also sell anonymized, aggregated spending insights to third parties such as retail businesses, researchers, or even investors. Mastercard Advisors and Amex have consulting arms that package spending data with analytics to advise businesses. Because issuers see both sides of transactions (consumer and merchant data), they have a rich view that few others can replicate.
Another data-driven revenue opportunity is offering benchmarking and API access. Some banks provide anonymized data feeds (via APIs) to fintech developers or corporate clients who pay for access to spending trends or verification services.
The integration of loyalty programs with card data can amplify monetization, where loyalty programs capture granular purchase details that not only improve the program but can be used (or sold) for market analysis.
Customer loyalty and rewards programs are key to card programs. While loyalty programs (like reward points, cash-back, airline miles, etc.) might initially appear as a cost center, since issuers give rewards to customers, they are, in fact, a crucial indirect revenue driver. A well-designed loyalty program can increase card usage, attract new customers, and improve retention, all of which translate into higher long-term revenue.
Companies with strong loyalty marketing programs have been found to grow revenues 2.5× faster than their peers and achieve significantly higher customer lifetime value.
Rewards incentives (e.g., earn 2% cash back or 1 point per dollar) motivate customers to use the card more frequently and for larger purchases. In the U.S., over 80% of all credit card spending is now on rewards cards. Credit card rewards are mostly funded out of interchange fees, meaning the issuer essentially reinvests a portion of interchange income to encourage more spending.
Increased spend not only boosts interchange earnings but can also lead to higher interest income if some of those purchases are carried as balances. And loyalty programs create a virtuous cycle, rewards spur spending, which in turn generates interchange to fund the rewards and net revenue to the issuer.
Plus, loyalty initiatives significantly improve customer stickiness. A card with compelling rewards (cash rebates, travel points, exclusive perks) becomes hard for customers to part with, even if a competitor offers a slightly lower interest rate or a one-time bonus. Increasing retention helps ensure that acquisition costs are repaid over a longer relationship and that customers continue to produce interchange, fee, and interest revenues for years.
Many consumers choose where to bank or which card to use based on rewards. Having a strong rewards program is a strategic investment in keeping your card top-of-wallet.
Plenty of revenue opportunities exist for a card issuer. Understanding these interlinked options and implementing them effectively in your card program can help your business generate more revenue and also help streamline operations.
No matter what your focus is on, be it interchange fees or cardholder fees, interest spreads or cross-sales, the end goal should be to build a strong card program that goes beyond revenue generation and boosts customer relationships.
