Smaller Card Issuers Can Out-Compete the Giants, New Study Finds

Customer lifetime value has long been treated as an output metric, a way to judge whether a card portfolio performed well after the fact. Increasingly, issuers are using it as an operating discipline, measuring whether every decision improves the odds that a customer stays longer, spends more consistently and becomes harder to displace.

That framing sits at the center of “The Issuer’s Customer Lifetime Value Report: Annual Benchmark in U.S. Card Issuer Performance,” the second annual PYMNTS Intelligence benchmark conducted with Visa Issuing Solutions. The research surveyed 500 U.S. executives in heads-of-payments roles across bank and non-bank card issuers and examined which institutions created lasting customer value and which lost momentum.

The headline finding is not especially flattering for an industry that spent aggressively on digital capabilities, embedded finance and AI. The share of issuers generating high customer lifetime value declined to 17% in 2025 from 21% a year earlier.

Yet the aggregate number conceals a more consequential development: issuer performance is diverging.

Large national banks entered the period with obvious structural advantages including deposit relationships, customer histories and extensive cross-sell opportunities. Even so, their share of high customer lifetime value performance dropped from 57% to 42%.

The Great Divergence

Smaller institutions moved in the opposite direction.

Banks with less than $1 billion in assets increased their high-value share from 5% to 17%, a result the report characterizes as evidence that relationship depth and community trust can offset scale disadvantages.

The highest-performing institutions shared several operating habits.

First, they reduced friction early in the relationship. Instant provisioning into digital wallets, digital onboarding and immediate usability shortened the gap between approval and first transaction. Instant issuance to digital wallets grew 85% year over year and is now offered by roughly two-thirds of high-value issuers.

Cards that become active quickly are more likely to capture recurring purchases such as groceries, subscriptions and transit spending, establishing usage patterns that extend beyond promotional periods.

Second, stronger performers treated trust as infrastructure rather than customer experience language. Higher-performing issuers prioritized real-time fraud prevention, dispute handling, transparency and reliability before maximizing monetization. The report found high-value issuers outpaced lower-value peers by nearly 26 percentage points in prioritizing enhanced security and fraud prevention.

Smaller institutions increasingly appear to be competing through continuity. They cannot outspend national issuers, but they can reduce customer uncertainty, preserve service quality and maintain relationship economics over time.

Third, the institutions creating the strongest lifetime value increasingly built around financial routines instead of product launches.

High-value issuers were more likely to embed cards into daily money movement through payroll-linked experiences, subscription activity and recurring spending. Twenty-two percent of high-value issuers offered embedded payroll or gig-worker card issuance versus roughly 12% to 13% among lower-value peers.

The report’s broader conclusion is that customer value is a relationship outcome rather than a product outcome. High-value issuers generated more than $2,000 in customer lifetime value across card types and exceeded $3,000 in direct and embedded card issuance models.

That helps explain why smaller issuers are gaining ground.