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Insights and Expertise

prepaid, digital card that works like any other card, just
with a $10 limit.

Perhaps your business has an expense management sys-
tem that issues digital cards to you for specific expenses,
Legal ease: like software subscriptions, travel or other business ex-
penses.

For each of the novel cards out there, it helps to consid-
er who actually is the cardholder of the card. Most users
would not pause to consider that question, but payments
professionals might take an interest to help assess the re-
lated risks. Consider an employee expense reimbursement
Flying PAN meets card program. The list of participants in a program like
this is long and often includes the following:
traveling MID: • Issuer: This is the bank that issues the card under
a license agreement with a card brand network. The
issuer is also party to the cardholder agreement with
Connecting the dots • Program manager: This is the business that has be-
the cardholder.
between untethered come registered as a card issuing ISO with the card
networks. Remember, as the regulated financial in-
payment accounts stitution issuing the cards, the issuer remains entire-
ly liable for legal compliance of the card program in-
cluding issues like fee disclosures, transaction moni-
toring and AML/OFAC compliance. The issuer then
hires a program manager to assist in marketing and
By Adam Atlas supporting the card program (like an ISO running an
Attorney at Law acquiring program).
n our industry's "before times," a cardholder would • Program manager agent: A bit like agents in the
present their physical card at a retailer that pro- acquiring industry, program managers sometimes
engage agents to drum up business. Depending on
cessed the card's primary account number (PAN)
I using a point-of-sale device programmed to accept how compliant the program manager remains, these
agents might start to look more like program manag-
cards for the associated merchant identification number
(MID). Not anymore. ers themselves – sometimes confusing customers as
to who is actually supplying the cards.
Today, the person using a card is often shopping online • Cardholder: Here is where the lines are often blurred.
with a digital card (PAN) perhaps provided to them by an Traditionally, we would never doubt the identity of
employer for expense reimbursement. The digital card is the cardholder. However, in business expense reim-
then presented to a merchant that might be using a pay- bursement programs, the cardholder is usually, tech-
fac to process the card, through a string of APIs, engaging nically, the business that engaged the program man-
with a MID that the merchant doesn't even know exists. ager to supply cards to their employees.
However, the employee using a card in the program
The decoupling of the typical cardholder from their typi- might see their own name on the (digital) card thereby
cal card and the decoupling of the merchant from their introducing an element of doubt as to who the card-
typical MID has enabled countless new business models, holder really is. Legally, the identity of the cardholder
but they also present risks and legal challenges that par- is very important because in most expense reimburse-
ticipants should perhaps consider. ment programs, the program manager and the issuer

Not your grandpa's card log only a business as a client and cardholder; they
perform less underwriting on the individual users of
How many payment cards do you have in your phone's the card.
wallet? I'll guess there are more than just a couple. Of • Card user: If your employer sends you on a business
course there are standard business and personal credit trip with a (digital) card that has your name on it, you
cards and debit cards, but there are also likely to be a suite might be forgiven for believing you are the cardhold-
of other cards with no physical equivalent. For example, er. The issuer might not even know you are using the
a retailer issues a $10 voucher redeemable anywhere as a card. It is most likely that the issuer boarded your em-
gift to shoppers; that card might be a single-use, branded, ployer as a cardholder.

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