Everything you need to know about Banking as a Service

BaaS is a plug-and-play financial service that allows platform businesses to offer financial products, such as bank accounts, cards, payments, and loans, directly into their platform, without getting a banking license themselves. 

A BaaS provider supplies the banking infrastructure that lets platforms offer financial products. Through APIs, they can embed these banking services directly into their platforms.

The BaaS provider also manages the regulated parts of banking, including compliance, risk management, and KYC requirements. This means a platform can launch branded financial products while focusing on the customer experience and interface, rather than obtaining a banking license or building banking infrastructure from scratch.

For SaaS platforms and marketplaces, BaaS turns a platform from a standalone tool into a central business environment where operations and finance can be managed in one place.

With embedded financial services, platforms can:

• Bring financial workflows into the product: Payments, accounts, cards, and lending can be integrated directly into the platform experience

• Reduce operational friction: Users no longer need to switch between multiple providers to manage business operations and finances

• Deliver a more seamless customer experience: Financial products feel native to the platform rather than disconnected third-party services

• Offload banking complexity: The BaaS provider manages banking infrastructure, compliance, risk, and KYC requirements, allowing the platform to focus on product and user experience

• Improve cash flow for customers: Businesses can access financial services where they already operate. For example, a restaurant owner may receive same-day access to payments directly within the platform instead of waiting several days

• Become more central to customers’ daily operations: As financial workflows become embedded, the platform shifts from an optional tool to a core operating system for the business.

Beyond product experience, BaaS introduces new ways to strengthen and monetize your business model.

Increased customer lifetime value

By becoming part of your users’ financial infrastructure in addition to their operational tooling, you make your platform necessary, reducing churn.

New revenue streams

Platforms can create new revenue streams with fees, embedded lending, sales-day payouts, and . 

Revenue generated from interchange fees is referred to as interchange revenue, which is the income businesses can earn if they issue cards. The issuing bank pays part of the interchange fee to the card-issuing business when payments are processed on their cards. 

Faster access to capital for users

With direct visibility into user activity, platforms can offer financing options and issue cash advances or loans based on real-time data. This allows for quicker decision-making and faster access to funds compared to traditional banking processes.

Epos Now 

Epos Now partnered with Adyen to move into embedded payments, allowing SMBs to sell and get paid entirely on Epos Now’s platform. 

With Adyen as their single partner, they went live within four months and saved precious resources while speeding up their go-to-market activities. 

Using Adyen’s global coverage and flexible APIs, Epos Now efficiently scaled these customizable services to 70,000 merchant locations in over 70 countries. This setup provides better insights into user needs because Adyen already processes the platform’s payments. 

Ultimately, embedding these financial services helps Epos Now deliver better value to its users while realizing a greater return on investment.

Fresha

Fresha has expanded its partnership with Adyen to launch Fresha Capital, an embedded lending solution that has already issued over $5.5 million in loans across seven global markets. 

By integrating capital access directly into its platform, Fresha enables salons and spas to bypass traditional banking hurdles and secure growth funding in minutes.

This integration allows business owners to access pre-approved loans based on sales performance, with funds often arriving the same day. Repayment is automatically adjusted as a percentage of daily sales, ensuring they remain proportional to revenue. 

By removing the financial friction of equipment repairs or seasonal lulls, Fresha shifts the focus for SMBs from short-term survival to long-term service quality and expansion.

BillingPlatform

BillingPlatform partnered with Adyen to launch BP Pay, a fully native payment solution embedded directly within its revenue management platform. 

By integrating Adyen’s global financial technology, BillingPlatform enables enterprises to manage the entire revenue lifecycle, from invoicing to payments, within a single, configurable system. This unified approach accelerates cash flow and reduces operational friction by eliminating the need for external gateways or manual reconciliation. 

With Adyen’s banking licenses and cross-border infrastructure, BillingPlatform can efficiently support the stringent security and compliance requirements of large global enterprises. Ultimately, this partnership empowers businesses to streamline their financial operations and deliver a seamless, intuitive experience to their global customer base.

Here are the three ways to bring banking services to your platform, each with different implications for speed, control, and global expansion:

Traditional financial institutions

Some companies choose to partner directly with an established bank. Traditional banks often rely on older technology stacks that aren't designed for modern API integrations. This can lead to longer development cycles and difficulty in customizing the user experience. 

If a business plans to operate in multiple countries, it may need to enter into separate deals with different banks in each region.

Aggregators

Aggregators act as a middle layer between your platform and a partner bank. They provide the modern software tools and APIs that traditional banks lack. 

Aggregators make the initial integration easier, but add another layer of communication. If a transaction fails or a technical issue arises, the aggregator has to coordinate with the underlying bank to resolve the issue, causing delays. 

Businesses using aggregators are still subject to the third-party bank's risk appetites and policies, which may change and affect the ability to serve certain types of users.

Full-stack BaaS provider

A full-stack Banking as a Service provider combines the banking license and the technology platform into a single solution. This model eliminates reliance on external banks because the provider owns the infrastructure and has the required regulatory permissions. 

A full-stack BaaS provider offers the highest level of reliability and speed. Since the technology and the license live under one roof, updates can be made faster, and money movement is more efficient. 

For platforms looking to scale, a full-stack provider with global licenses ensures a consistent product experience as the business expands into new markets.

Choosing the right partner is essential for maintaining compliance and delivering a high quality user experience. Adyen provides a single financial technology platform that integrates all aspects of BaaS into one system, including:

• Capital: You can offer flexible business financing based on the transaction history seen on your platform, helping your users grow without the hurdles of legacy lending.

• Accounts: You can provide branded business accounts to your users, allowing them to manage their funds and view their balance within your platform interface.

• Issuing: You can create and manage physical or virtual payment cards. This enables your users to spend their earned funds immediately, whether they are paying for business supplies or managing employee expenses.

By using a unified platform, you avoid the complications of managing multiple vendors and fragmented systems. This allows you to launch financial products quickly and focus on providing value to your users, while the complexities of banking are managed on your behalf.

Get in touch to learn more about how to integrate financial services into your platform.

• Banking as a Service allows platforms to embed financial products like accounts and cards into their existing software offering

• BaaS providers handle the complex regulatory and compliance tasks so that businesses can focus on user experience

• Embedded finance increases user retention by making the platform a central hub for both operations and money management.

• Interchange revenue provides a scalable way for platforms to earn a share of the fees generated during card transactions

• Full-stack providers offer the most reliability and global reach by combining banking licenses with modern technology in one system.