The configuration in "Sales -> Payment Services -> Payment Template" is not related to the credit card IFrame (Flex Checkout).
This setting only applies to payment methods that would usually cause a redirection to an external payment page (like Paypal, iDeal, Sofort, etc.).
To use the IFrame for credit cards (Flex Checkout), go to "Sales -> Payment Methods" and enable the payment method "CC Direct Link". This is independent of the above configuration.
If you want to change the styling of the IFrame, please see this article.