It depends on the type of card issued/use case, but prepaid cards issued through Stripe Issuing would still have that same challenge :-( We agree it's a pretty sub-optimal user experience.

(That said, given many of these businesses may be on Stripe, we should have more ability to work with them to improve the experience for customers...)

This is my question too. I want to know how these generated Stripe cards are classified by the major credit card processors, because generated cards often get declined if determined to be temporary/gift cards.