Tutorial: Issuing a Secured Credit Card
Overview
Mbanq Cloud's CORE capabilities enable fintechs and neo banks to offer secured credit cards with minimal need for extensive credit reviews. These cards are designed for individuals with little or no credit history, as well as those seeking better financial control.
A secured credit card is linked to a savings or checking account, allowing precise spending control based on the account balance. This setup:
Prevents overspending.
Supports automatic payment deductions to avoid late fees.
Functions anywhere traditional credit cards are accepted.
The collateral deposit acts as security, only used if the customer defaults. By making timely payments, customers can build or improve their credit score, increasing financial stability while enjoying the convenience of credit.
Through Mbanq Cloud, fintechs and neo banks can efficiently launch secured credit card products, empowering customers to manage finances responsibly and grow their credit history.
Product Setup
Before the Platform can issue credit cards, the credit program must receive approval from the sponsoring bank. The terms of this approval are used to configure the required products in the Mbanq system. Mbanq’s Implementation team is responsible for creating all necessary products to support credit card issuance, and the Product IDs for each created product will be used when calling the Credit Card APIs.
The following products are created on the Mbanq system:
Reserve Account Product - Reserve Account Product ID is used for creating reserve accounts for clients. This is configured at the Credit Product level, if the credit product is a secured credit product.
Credit Product: Credit Product ID is used for creating credit accounts.
Card Product: Card Product ID is used for creating and issuing credit cards linked to the credit account.
Credit Card Flow
The following CORE APIs outline the steps for issuing credit cards to the platform’s end users:
Create and Activate Client
Depending on the Platform’s onboarding flow—whether issuing a credit card to a new user or an existing user—the client must be created using the Create Client API, and KYC must be successfully completed before activation.
Primary address creation and activation is mandatory for credit account creation.
For a detailed process, refer to the API reference documentation for Client Onboarding.
These steps can be skipped if the client is already active on the Platform.
Create and Activate Deposit Account
A deposit account must be created for a client in order to issue a secured credit card. The client will fund the collateral amount into this account, from which the funds will be debited and held as reserve once the credit account is created and approved.
Create Credit Account
Use the Create Credit Account API to define the credit terms and create a credit account. Use the Credit Product ID provided by Mbanq to specify the secured credit product, and include the appropriate interest rate, credit limit, client ID, and deposit account ID.
Approve Credit Account
After obtaining the user’s consent or signature for the agreed credit terms, use the Approve Credit Account API to approve the credit account. Once invoked, the amount equal to the credit limit will be debited from the deposit account, placed on hold in the reserve account, and the secured credit account will be ready for credit card issuance.
Order Card
Once the credit account is approved and active, the card can be ordered. Depending on the requirement, either a virtual or a digital-first card can be issued by passing the credit account ID and the card product ID.
Credit Account Operations
The Credit Account Operations APIs allow you to manage and monitor all aspects of an active credit account. These endpoints provide functionality to retrieve transaction details, check payment history, view outstanding balances and due dates, make payments, and configure automatic payment schedules.
Use these APIs to:
Track account activity and spending patterns.
Ensure timely repayment and avoid late fees.
Provide customers with clear, up-to-date credit account information.
These operations support transparent account management and help maintain strong customer relationships while ensuring compliance with credit program terms.
Updated 2 days ago