CPI Card Group Inc. (‘CPI’), a payments technology company, provides a comprehensive range of payment cards and related digital solutions.
The company is a leader in several areas of the U.S. payment card solutions market, including debit and credit card production, personalization, and Software-as-a-Service-based (‘SaaS-based’) instant issuance services. The company is also a market leader in the production of ‘Prepaid Debit Cards,’ which are defined as debit cards issued on the networks of th...
CPI Card Group Inc. (‘CPI’), a payments technology company, provides a comprehensive range of payment cards and related digital solutions.
The company is a leader in several areas of the U.S. payment card solutions market, including debit and credit card production, personalization, and Software-as-a-Service-based (‘SaaS-based’) instant issuance services. The company is also a market leader in the production of ‘Prepaid Debit Cards,’ which are defined as debit cards issued on the networks of the ‘Payment Card Brands’ (Visa, Mastercard, American Express, and Discover), but not linked to a traditional bank account, and related secure packaging solutions. The company serves thousands of customers through direct and indirect sales channels and has maintained long-standing relationships with its top customers.
The company’s solutions provide a full suite of products and services required to produce, personalize, and fulfill payment cards, while maintaining the security requirements of the Payment Card Brands. The company is integral to many of its customers’ card programs, pairing design and production with an end-to-end offering of data personalization and services that are integrated within its customers’ operations and require process and/or technology integration, such as secure data links to transfer highly sensitive cardholder information.
The company’s revenues are primarily generated from the production of, and services related to, secure debit and credit cards that are issued on the networks of the Payment Card Brands, including Prepaid Debit Cards.
Segments
The company’s business consists of the following reportable segments:
Debit and Credit: The company primarily produces secure debit and credit cards and provides card services for the U.S. card-issuing financial institutions. Services include personalization; instant issuance, which provides customers the ability to issue an instant personalized debit or credit card on-demand within a customer location; and other payment solutions, such as digital push provisioning for mobile wallets; and
Prepaid Debit: The company primarily provides secure packaging solutions, Prepaid Debit Cards, and other integrated prepaid card services to prepaid program managers in the U.S.
Strategy
The company has initiated the expansion of its offerings to customers in non-traditional industry verticals, such as the sale of its card solutions to the healthcare and gig economy verticals, which has already expanded its addressable markets. The company’s strategies are customer focus, efficiency, and innovation and diversification. By helping its customers elevate their customers’ experience, the company fosters compelling connections between people and technology through traditional and next-generation solutions that build brands and enhance people’s everyday lives. For both the company’s traditional business and its market expansion opportunities, the company is well-positioned for success given its history of innovation and ability to evolve with the needs and expectations of its customers.
Solutions
Debit and Credit Payment and Other Cards
For many customers, the company pairs card design and production with an end-to-end offering of data personalization and services that are integrated within its customers’ operations. In addition to providing payment solutions to typical financial institution and fintech payment card issuers, the company also produces payment and other cards for healthcare payments, entertainment venues, government disbursements, transit services, and other industries.
The company primarily produces contact and contactless cards that are issued on the networks of the Payment Card Brands. Contact cards feature an integrated circuit that interfaces with a payment terminal over a contact plate on the surface of the card when inserted into an enabled payment terminal. The company also produces contactless cards (also known as dual interface cards), which share the functionality of a contact card but also have a radio-frequency identification (‘RFID’) antenna that utilizes near field communications (‘NFC’) technology to allow transactions to process on a contactless basis when the card is brought within the requisite proximity to an NFC-enabled payment terminal. Contactless cards have increased as a percentage of sales versus contact cards for both CPI and the wider U.S. industry.
The company is a provider of eco-focused card solutions in the U.S. payments market. Depending upon design and card construction, the company’s Second Wave and Earthwise eco-focused cards incorporate various types and amounts of upcycled material, including recycled ocean-bound plastic (‘ROBP’) and recycled PVC. Cards in the company’s eco-focused portfolio have been approved by two of the major Payment Card Brands. These solutions aim to satisfy increasing U.S. cardholder demand for more environmentally friendly products and help support the company’s and its customers’ environmental objectives. The company also has a variety of metal card offerings that it produces as contact or contactless, depending on the needs of its customers.
The company also produces non-chip cards that only utilize magnetic stripes, contactless payment and non-payment cards that utilize NFC technology, and cards that include both magnetic stripes and NFC technology.
Card Data Personalization and Fulfillment
The company facilitates the issuance and distribution of payment cards to consumers for the majority of its U.S. customers. The company offers a variety of data personalization and mailing solutions for both daily and bulk mail programs.
The company’s customers provide it with data, in many cases through technology integrations, that the company uses to personalize payment cards to individual consumers. The company provides data preparation and personalization solutions for debit, credit, and Prepaid Debit Cards. The company’s technology-driven personalization services provide a wide range of customization options using advanced processes to encode, program, and emboss or print data, such as the cardholder’s name and account number. In addition, the company provides data preparation services related to the embedded chips within payment cards.
In certain cases, the company prepares customized mailers to deliver cards to individual cardholders. The company is also able to personalize payment cards and related collateral on a one-by-one, on-demand basis for its customers, enabling individualized offerings in an expedited manner. The company’s service offering includes online ordering of a customized payment card through a program manager, with direct fulfillment to a consumer.
The company’s breadth, quality, and speed of personalization solutions further differentiate it with its financial institution and prepaid program manager customers and enable it to access additional business-to-business and business-to-consumer verticals, such as healthcare, gig economy payment, corporate incentives, government disbursement, benefits, insurance, tax refund, transit, payroll, and others.
SaaS-based Instant Card Issuance and Other Digital Solutions
The company provides a comprehensive solution that makes it easy for its customers to issue payment cards in a customer location and on-demand. The company’s proprietary and patented SaaS-based Card@Once instant issuance system and personalization solution offers a faster delivery of payment cards by its customers to their consumers, typically within a few minutes.
The company’s Card@Once software solution transfers data from its servers to encode a contact or contactless card and personalizes the card on a hardware solution placed in its customer’s location. This process results in the issuance of a completely personalized, permanent debit or credit card to individual cardholders within a customer’s location. These processes are audited for Payment Card Industry (‘PCI’) Security Standards Council data security standards compliance annually. The company’s Card@Once solution generates both initial sales revenue for the hardware and recurring revenue from the sale of cards, card personalization, and consumables.
The company also has the ability to provide other digital solutions, including digital push provisioning, which allows its customers to push card credentials to a cardholder’s mobile wallet, and digital cards. Although revenues for these additional digital solutions have been insignificant to date, these solutions have the opportunity to grow in the future. In 2024, the company expanded its digital solution offerings by entering into a strategic relationship with a third party to resell credit and debit card fraud prevention services. Many of these integrations have been developed over time to support the reselling of personalization services through the company’s digital SaaS-based instant issuance solution. Digital solutions often require upfront investment and additional integration, but have the potential to deliver incremental revenue and increased margins over time.
Prepaid Debit Cards and Related Tamper-Evident Secure Packaging Solutions
The company is a trusted and significant supplier of Prepaid Debit Cards and related secure packaging solutions in the U.S. The company’s solutions in this market are differentiated by its capabilities to provide custom solutions related to features, such as security, aesthetics, and the use of eco-focused materials, and by its large volume capacities. The company also offers specialized and innovative tamper-evident secure packaging solutions aimed at reducing fraud.
The company’s customers include some of the largest prepaid program managers in the U.S., with whom it has built joint processes over many years, utilizing technology in certain instances, to facilitate the exchange of critical data, such as information used to print and encode card number, expiration, and security codes. Prepaid program managers sell the cards and related packages the company produces to retail channels, including national big box, grocery, and convenience/gas retailers, and others in various industries. For prepaid cards sold through retail, the relationships and processes the company developed allow it to provide activation data, including information printed on the packaging, which transacts with the retailer’s point of sale system to activate cards for use. In certain cases, the company also manages the fulfillment of fully completed Prepaid Debit Card packages to retail locations on behalf of its customers.
The company’s prepaid solutions include open-loop general purpose reloadable cards that are issued on the networks of the Payment Card Brands, retail gift cards that can be utilized for purchases on an open or closed-loop network, and Restricted Authorization Network prepaid cards designed for a unique set of merchants. These cards typically utilize magnetic stripes to facilitate payment transactions, but in certain instances, cards may use bar codes and contact chips. The cards the company produces are offered in a variety of treatments, substrates, finishes, and packaging options focused on both security features and card and package design, and the company has teams that consult regularly with its customers to create advanced solutions to address their needs.
Customers
The company has developed long-lasting relationships with its customers by working together to enhance payment card programs and by providing innovative, high-quality solutions and customer service. The company primarily sells in the U.S. market and its diverse customer base includes some of the largest issuers of secure credit and debit cards, the largest prepaid program managers, major financial institution platform providers, and card processor organizations, leading fintechs, thousands of small to mid-sized financial institutions, and others.
Solutions for customer segments in the company’s traditional markets include:
Large card issuers (defined as the top 10 card issuers in the United States based on an average of cards issued during the past three years): secure debit and credit cards;
Small to mid-sized financial institutions: secure debit and credit cards, card personalization services, instant card issuance, and other payment solutions, including digital solutions. The small to mid-sized financial institutions market segment includes regional banks, independent community banks, credit unions, and others, and is often served by the company through Resellers. The company defines ‘Resellers’ as financial institution platform providers and card processor organizations that assist financial institutions with their core banking operations, including management of their credit and debit card programs;
Fintechs: secure debit and credit cards and card personalization services;
Prepaid program managers: Prepaid Debit Cards, secure packaging solutions, and other integrated prepaid card services. These prepaid program managers resell to their customer base, which represents a significant number of U.S. distribution points, such as retail channels including national big box, grocery, and convenience/gas retailers, and others in various industries, and assist with the management and operations of their customers’ Prepaid Debit Cards programs; and
Other: payment and non-payment cards for healthcare providers, entertainment venues, government disbursements, transit services, and others.
The company had one customer that accounted for 10% or more of its net sales in 2024. Net sales from this customer were approximately 18% of total net sales for the year ended December 31, 2024, and the company has been serving this customer for nearly 20 years. Although the company’s direct relationship is with this customer, this customer resells its services to a large number of indirect customers. Nearly two-thirds of the company’s net sales for the year ended December 31, 2024, were from its top 10 customers, whom the company has been serving for an average of more than 10 years. The majority of these sales are from Resellers, who provide the company’s products and services to thousands of indirect customers. Through the company’s direct and indirect customer relationships, a majority of its annual net sales in its Debit and Credit segment are derived from small to mid-sized financial institutions and fintechs. Individually, many of these customers, including independent community banks and credit unions, represent minor amounts of the company’s annual net sales.
The company typically enters into master purchase or service agreements that govern the general terms and conditions of its commercial relationships. The company then enters into a purchase order or other short-term arrangement that defines the quantities of products to be delivered or services rendered and other terms specific to the order, as appropriate. In most cases, the company’s contractual arrangements include neither exclusivity clauses nor commitments from its customers to order any given quantities of products on a medium or long-term basis.
Sales and Marketing
The company markets itself as a leader and trusted partner in payments, seeking to meet or exceed the needs of its customers through high quality, flexibility, and meaningful, innovative products at value-driven pricing. The company strategizes and collaborates with its customers to bring them valuable and innovative solutions. The company has sales representatives, customer relationships, and partners that provide a wide geographic reach across the United States to sell and market its solutions. The company’s sales representatives offer complete end-to-end solutions that incorporate the full spectrum of its products and services from concept to delivery.
The company’s sales and marketing strategy is focused on strengthening its relationships with existing customers through a consultative approach that includes cross-selling expanded services and sharing expertise to enhance customers’ card programs. The company’s marketing efforts focus on the needs of its specific types of customers and leverage the strength of its full-service offerings to attract new customers. By tailoring the company’s marketing strategy to different customer segments, the company is able to provide relevant targeted solutions to meet its customers’ individual needs. The company uses an array of marketing communications and thought leadership across various industry publications, editorial white papers, case studies, conferences and trade shows, print and digital advertisements, educational webinars, podcasts, and blogs to introduce its existing customers and new customers to innovations in the payments market. The company also strives to develop new or enhanced products by innovating through research and development activities.
Suppliers
For the year ended December 31, 2024, approximately 95% of the company’s purchased microchips and antennas came from these three main suppliers, and approximately 78% came from one supplier, including most of its contactless chips.
Intellectual Property
As of December 31, 2024, the company had 66 U.S. and foreign trademark registrations and applications, 63 existing U.S. patents, 50 existing foreign patents, as well as 34 pending U.S. and foreign patent applications. The company’s U.S. and foreign patents and applications have an average remaining maturity of approximately 12 years, and its trademarks will be due for renewal for additional ten-year periods on an ongoing basis.
Regulation
As a service provider to financial institutions in the United States, the company is subject to certain Federal Trade Commission requirements, certain privacy provisions of the Gramm-Leach-Bliley Act and its implementing regulations, various other federal and state privacy statutes and regulations, certain of the PCI Security Standards Council’s requirements, and the Health Insurance Portability and Accountability Act (‘HIPAA’), each of which is subject to change at any time. Outside of the United States, the company is subject to privacy laws and regulations of certain countries and jurisdictions.
Under the PCI Security Standards Council’s requirements, the company must meet certain security standards in order to achieve compliance that allows it to produce and personalize debit and credit cards issued on the Payment Cards Brands’ networks. These standards include extensive requirements with respect to the physical characteristics of the company’s facilities, as well as its utilization and digital storage of cardholder data.
In order to comply with the company’s obligations under applicable laws, the company is required, among other things, to comply with reporting requirements, to implement operating policies and procedures to comply with Office of Foreign Assets Control requirements, to protect the privacy and security of its customers’ information, and to undergo periodic audits and examinations.
The CFPB has examination and supervision powers with respect to service providers who provide a material service to a covered financial institution offering consumer financial products and services, including service providers like the company.
History
The company, a Delaware corporation, was founded in 2007. It was incorporated in 2007. The company was formerly known as CPI Holdings I, Inc. and changed its name to CPI Card Group Inc. in 2015.
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