MSL Licenses Own Processor for Card Issuers

The cloud-native card issuance and transaction processing provider, MSL, has announced the signing of its first European licensees for its Processor Licence, a move that promises to give card issuers greater control and cost savings in their processing operations. First introduced in October 2024, the Processor Licence enables banks, e-money institutions, programme managers, and technology providers to become card processors in their own right. The licence, which covers issuer processing, a core banking "lite" layer, AML and compliance monitoring, and MSL's fraud prevention module, is modular, allowing clients to deploy only the components they need.

The release highlights the imbalance in the processing landscape, noting that around 40,000 card issuers worldwide rely on fewer than 50 processors operating at scale. This imbalance, referred to as the "success tax," creates significant challenges for issuers as their programs grow, leading to rising processing costs and the need for costly and disruptive switching of providers. MSL's Processor Licence aims to address this issue by offering a model that removes the trade-off between managed services and licensing, allowing issuers to begin on a managed service and transition to a licence when they are ready.

The Processor Licence model replaces per-transaction and per-account processing fees with a flat licence fee, which MSL estimates will result in savings of 60% to 80% for issuers with more than 100,000 active cardholders compared to typical industry processing rates. This move is expected to provide issuers with greater control over their processing operations, as the platform is already integrated with the issuer's existing codebase, APIs, and webhooks, eliminating the need for a migration project.

The Processor Licence also supports compliance with the Digital Operational Resilience Act (DORA) for European institutions, bringing a critical outsourced service under the institution's direct operational control and reducing third-party concentration risk. MSL will continue to offer its managed service alongside the licence, allowing clients to choose the deployment that suits them, whether managed service, licence, or a hybrid of both, and to change that choice as their business evolves.

The release also notes that MSL plans to expand the licence model globally over the coming years. The company, headquartered in London with operations in Spain, Malta, and the United States, is a Mastercard-certified issuer processor and holds Visa certification in Latin America and the Caribbean. The platform is available as a managed service, as a licence, or as a hybrid, with AML/CFT and fraud monitoring built in.

The Processor Licence model is expected to address the "success tax" by giving card issuers ownership of their processing platform, reducing costs, and increasing control over their operations. This move is expected to benefit issuers by providing a proven platform that can be owned outright, reducing the need for costly and disruptive switching of providers.