New cards, new challenges | How Klarna & PayPal’s card launch highlights the need for reliable card issuance
This June, Klarna and PayPal made some big moves into the physical card space. Klarna teamed up with Visa to launch a BNPL (buy-now-pay-later) debit card, while PayPal’s partnership with Mastercard aims to help the brand make the jump from phone to wallet.
Coupled with other wave-making announcements like Stripe’s all-in moves on AI and stablecoins, PayPal and Klarna’s announcements emphasize a broader industry shift as fintechs transform from niche digital players to comprehensive financial services platforms.
But here's the thing: as these digital natives start shipping plastic cards to people's homes, they're about to face the same set of headaches that’s been bugging traditional card issuers forever—making sure those cards actually reach the right address.
MAJORITY, an all-in-one mobile bank for internationals, faced just such a challenge.
As MAJORITY issued debit cards, they found that incorrect or incomplete addresses lead to undeliverable cards—and frustrated account holders. With 10% of issued cards failing to reach their account holders, MAJORITY began looking for a solution.
Enter Smarty. After implementing our US Address Verification and US Address Autocomplete, MAJORITY had a 50-70% decrease in their undeliverable debit cards. Now, only 3-5% of the cards MAJORITY issues are undeliverable. 🎉
In addition to failed deliveries, inaccurate address data can lead card issuers to encounter failed deliveries and data fraud, and an ineffective autocomplete can result in long onboarding processes, form friction, and form abandonment.
These challenges can be addressed (pun intended 😉) with address verification—validating and standardizing an address—and autocomplete, a form checkout feature that suggests an address while a user types.
At Smarty, we have the tools that can help companies save time and money on card issuance. Give them a whirl for yourself, or keep on reading to learn about the tangible benefits these tools have for fintechs and financial platforms with card issuance needs.
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In this blog, we’ll cover a few things:
The costs of bad address data
There are loads of ways inaccurate address data can impact debit card issuance.
When a card is shipped to an undeliverable address, operational costs rise. Reissuing a card adds labor and shipping costs, and if the address in question still hasn’t been verified, there’s no guarantee the card won’t need to be redelivered again. Eek! 😰
Address data also impacts the onboarding process. Without address autocomplete, account holders may enter typos and errors into a registration form that result in a failed delivery. No autocomplete also means no dropdown with addresses for users to choose from, making onboarding take extra time.
Plus, incorrect addresses aren’t always entered by accident. Unverified addresses can be fraudulent, meaning invalid data can slip into your database undetected. This puts companies at risk of address fraud, which can be costly to fix.
There’s no mistaking it: Companies that issue physical cards need reliable address data to optimize card issuance. Without it, they risk wasting time and resources and miss out on opportunities to successfully deliver cards to their account holders.
Great news! The tools to get it right the first time are at your fingertips.
The solution? Address verification & autocomplete
As we mentioned before, the challenges that come from inaccurate address data don’t need to remain unsolved. Card issuance can be smooth sailing with address verification and autocomplete. Get ready to do a victory dance! 💃
Better yet, these tools have benefits beyond accurate delivery. In addition to ensuring cards reach the correct address, verification and autocomplete can improve data quality and create a better onboarding experience for future account holders.
Onboarding
Let’s start where your account holders start: filling out a form. This is where address data enters a database. Why spend valuable time and resources identifying and removing incorrect address data from a database when you could prevent bad data from showing up in the first place? 🤔
With autocomplete, account holders are only presented with valid, verified addresses—even those serviced by trusted providers other than the USPS.
They’ll be able to quickly provide their address, and you’ll be able to rest easy knowing that the addresses entering your database are deliverable, and that you’ve limited the amount of pricey headaches waiting for you down the road.
When your addresses are validated as they enter a database, this enables you to confirm deliverability before printing a card. This means no wasted cards and no customers left wondering if their card was lost in the mail. It’s a win-win!
User experience
Autocomplete also has impressive effects on user experience. With Smarty’s autocomplete, addresses appear after one keystroke, leading to faster form completion. Through this, your customers will avoid 80% of the keystrokes they typically use to type out their address. Score! 🙌
When potential account holders are able to find their address from a drop-down list in mere seconds, they’re less likely to abandon a form during sign-up. The accurate addresses they select also reduce the amount of time your customer service team has to spend on address-related tickets.
Don’t leave your account holders’ addresses to be corrected in a customer service call. Verify your address in real time with address autocomplete to keep your database clean and your customers happy with accurate, on-time card issuance.
Delivery
While autocomplete can validate the addresses of new account holders, leading their cards to be successfully delivered, address verification can standardize and clean addresses in an existing database.
With impressive speed and accuracy, verification corrects misspelled addresses with fuzzy logic address matching, and flags missing secondary addresses.
Secondary address information, such as apartment, suite, or building numbers, is often essential to ensure cards reach account holders. Your account holders need their cards delivered to their apartment, not the Dunkin’ two floors below.
With verification, secondary addresses are within reach.
Through this standardization, data governance is improved. Get ready to see the benefits of verification with your own eyes.
Verification cuts costs. Correct addresses make for fewer lost or returned cards, meaning you’ll lower spending by avoiding excessive redeliveries and reprints. Think about all that money you’ll save on production and postage costs. 🤑
Delivering cards to account holders right off the bat also leads to higher activation rates. When cards are shipped without delays, account holders won’t have time to forget about them. They’ll be activated and used by their eager account holders right away!
Don’t leave your account holders wondering if their cards are ever going to arrive. Keep your account holders (and your wallet) happy with cards that arrive on-time, the first time.
Fraud risk
In addition to improving card delivery, verification keeps address data clean. This is especially important when it comes to preventing fraud.
Fintech companies, especially those involved in banking, don’t want to validate a fraudulent address. Verification has your back!
When an address has suspicious aspects—like invalid formats or nonexistent locations—verification flags the inconsistent or abnormal data. Smarty’s most basic verification plans validate 25,000+ street addresses per second, meaning you can detect fraud long before it becomes a costly problem.
Quality address data helps companies comply with regulations protecting account holders’ personally identifiable information (PII). It also improves customer records and accuracy and helps companies maintain their account holders’ trust.
In 2024, financial crime compliance costs have increased for 99% of financial institutions, and global financial crime compliance costs have increased to $65 billion.
Don’t add to these numbers. With verification, only real addresses will be approved, meaning you’ll have total peace of mind. 🧘
Conclusion
With their leap to physical cards, Klarna and PayPal are leveling up their card issuance game. As more fintechs make this shift, address data is going to need to level up right along with it. Otherwise, bad address data will sabotage the convenience and immediacy these financial service platforms rely on.
With the mind-blowing reliability of verification and the impressive accuracy of autocomplete, this upgrade is possible. Fintech companies can issue cards with full confidence.
Investing in these tools now can help save card issuers from costly form friction, redelivery fees, and address fraud later. Improvements to your onboarding process, card delivery, and data quality are yours for the taking. Have that confetti cannon and cake ready, you’ll want to celebrate. 🎉
Put Smarty’s address verification and autocomplete to the test, and you’ll be optimizing your card issuance like a pro.
