The Instant Issuance program is a consumer debit card program. Enterprise card programs can support prepaid or debit programs designed for consumers or corporations.
Traditional debit cards allow cardholders to spend the funds in their checking account. However, Apto debit cards also allow cardholders to spend any store of value. This means you could issue a card connected to both a crypto wallet and traditional bank account, and your users could then select whether to spend crypto or fiat currency whenever the card is used to make a transaction.
The Instant Issuance program is a consumer debit card program. Behind the scenes, we create a bank account and link the debit card to it as the card’s “funding source.” But we can also launch Enterprise debit card programs where you control the cardholder’s store of value (e.g. your crypto wallet), or a third party controls the store of value (e.g. the user’s bank account).
In each case, your users have an account (or store of value) that they can deposit funds into and that Apto can then draw upon when a transaction is made with the card. When a transaction is made, a request flows from the merchant, through the network, to Apto, where we then establish whether the transaction can be authorized or not. If the cardholder has sufficient balance to cover the purchase, the transaction will be authorized, and the cardholder’s balance debited.
However, if the funding sources connected to a card are not under Apto’s direct control, we require you participate in the authorization flow using external auth.
In these scenarios, when the transaction request reaches Apto, we’ll perform our standard authorizations (card active, fraud, etc.) and then route the transaction to you. At this point the decision is in your hands. You can query the cardholder’s balance and perform any additional logic you desire. If you decide to authorize the transaction, you’ll return ‘authorize’ and we’ll route an acceptance message back through the network to the POS terminal.
When you authorize a transaction, we recommend you immediately capture funds from the user’s wallet and transfer them to a wallet that you control, so that they can no longer be accessed by the cardholder, and only authorize the transaction if that transfer was successful. If you control your users' wallets, you may also provide API access for Apto to debit funds from.
You are responsible for all of the transactions you authorize throughout the day. During settlement, the card networks will calculate the net-settlement amount that needs to be transferred between the issuing and acquiring banks, and, during their nightly sweep, will collect everything that is owed. In advance of this, Apto will send you a settlement file instructing the amount that should be deposited into the settlement account to cover the day’s transactions. If you do not control your user’s accounts and are using ACH to collect funds back from them, you should maintain a float in your program wallet to account for delays.
Prepaid cards are similar to debit cards, but instead of drawing on a funding source controlled by the cardholder (such as their Instant Issuance Apto card account), they draw on a separate account that you keep on behalf of the cardholder.
Prepaid card programs can be used for merchant gift card programs, payroll cards, foreign currency cards, employee expense cards, transit cards, travel cards, consumer refunds, and a variety of other payment experiences. They can be issued to consumers or corporations. Prepaid cards can be configured as either ‘closed loop’ (can only be used at your store) or ‘open loop’ (can be used anywhere Visa or Mastercard are accepted).
Prepaid cards can be issued as:
- single use - they can be issued with an initial balance and then never funded again
- multi-use - they can be reloaded as many times as desired (by either the developer or the cardholder, depending on the configuration)
Apto prepaid cards are issued with a virtual account and routing number that mimic a traditional bank account, and allow the card to accept funds via ACH and direct deposit. Funds can also be loaded via cash and check.
While this virtual account is represented as a unique account by the Apto platform, the card balances are actually held in an underlying pooled funds account (PFA). This account will be held by our issuing bank on your behalf and it holds all the balances for all of the cards within your card program.
When a transaction is made, a transaction request is routed through the network to Apto. We authorize or decline the transaction based on your card program’s rules.
In an ‘open loop’ system, the cardholder’s card balance is reduced, and funds are moved from the PFA to your settlement account, where they are then collected by the card networks in their daily settlement sweep.
In the ‘closed loop’ system, the cardholder’s money has been given to the merchant up front, where it resides in their PFA. When a transaction occurs, the balance of this pooled funds account is credited by the transaction amount and the cardholder’s balance is debited. The card networks are not involved.
Although your prepaid cards are issued with an 18-digit card number, this doesn’t mean the card is affiliated with any of the card networks (such as Visa or Mastercard). When a transaction occurs, the POS routes it to the Gateway, which uses the first 6-digits of the card number to route it to the closed loop, not to Visa or Mastercard.
Apto also allows you to issue prepaid cards to corporations rather than individual cardholders. In this model, Apto completes identity verification on the corporation via a business verification (KYB) process. Employees of that company may then use cards issued to that corporation in their day-to-day spending.
Apto will create a pooled funds account (PFA) account for each of the corporations you create. The PFA will carry a virtual account and routing number that mimics a traditional bank account. The PFA can accept funds via ACH and direct deposit. Funds within the PFA can then be used to load the individual cards issued to that corporation. The individual cards can only accept funds from the PFA, and the corporation’s employees cannot load their cards themselves via alternate means.
Similar to consumer card programs, although a card is loaded with a balance, the actual funds remain in the underlying PFA held by the corporation. The card’s balance is a ledger item that is increased by the transfer amount. However, when a transaction is made, authorization requests are made against the balance associated with this specific card, not the shared balance in the PFA.
The standard flow of funds for a corporate prepaid card program is outlined as follows:
- You bring on a new corporate customer.
- Apto creates a new PFA and shares those account details with the corporation.
- The corporation loads the PFA through a wire transfer or ACH.
- The corporation requests a new card.
- If the request is approved, Apto returns the card details to the corporation.
- The corporation assigns funds from the PFA to the specific card.
- The corporation gives the card details to an employee to use in a transaction.
- The employee uses the card to make a purchase.
- The network receives the transaction request and forwards the request to Apto for authorization.
- Apto performs standard checks on the card, such as card state, fraud control, etc.
- The transaction amount is compared with the card balance. The transaction is rejected if the balance is less than the transaction amount.
- If the transaction is authorized, the card balance is decreased, and funds are moved from the PFA to the corporation’s settlement account.
- During the settlement phase, the network pulls the approved funds from the settlement account.
Corporate prepaid cards are only issued when you request them via the Apto API. Individual cardholders (corporate employees) can not apply for cards themselves.