The United Nations estimates that nearly 300 million people around the world will need humanitarian aid in 2024.
In 2023, the UN estimated that global aid needs reached a high of almost $57 billion, a number that will continue to rise over the coming years as new conflicts, climate change and resulting rising food insecurity means more people need help.
The use of cash is rapidly declining around the world
At the same time, the way this money needs to reach beneficiaries is changing. As an example, 91% of payments in Nigeria in 2019 were in cash. In 2023, that number had dropped to 54% and it is expected to drop further to 42% by 2027. In Nigeria cash is being replaced by cards, digital wallets such as Paga, PayPal or Carbon and account-to-account transactions.
India, Brazil, Ghana, Kenya and Senegal are other examples of countries that are transforming equally fast, but the trend away from cash is global. Cash as a % of total payments fell by 8% globally in 2023, and is expected to decline by 6% a year in the next few years. Like in Nigeria, cards, digital wallets and account-to-account transactions are expected to replace cash as well as mobile money in countries such as Kenya, Senegal and Bangladesh.
What this means for humanitarian aid charities
This rapid move away from cash is both good and bad news for global charities.
The good news is that digital payments have important benefits over cash. They allow money to be disbursed instantly anytime anywhere in the world and time is always of the essence in global humanitarian aid. Secondly, digital payments are easily automated which not only reduces manual work but also reduces errors. Finally, it is easier to trace digital payments which leads to increased transparency and control.
Prepaid cards in particular have great potential in global humanitarian aid. Their reduced compliance requirements support financial inclusion by serving underbanked consumers. The ability to top them up instantly allows for instant disbursement and their global acceptance means they can be used anywhere in the world.
There are also some downsides to digital payments. The first is that the increased transparency combined with banks being under increased pressure to comply with anti-money laundering regulations can slow things down. This is particularly an issue in global humanitarian aid where it may be impossible or impractical for beneficiaries to provide all the documentation required to pass the banks’ Know Your Customer (KYC) checks.
The second downside is that, apart from cards, the new digital payment methods are globally fragmented. Every country has their own digital wallets, account-to-account and mobile money schemes. Even issuing cards is local. Acceptance of Visa and MasterCard is global but licences to issue cards are local.
Many of these issues can be overcome by using a payment orchestrator. To explain why, let’s look at what payment orchestration is.
What is payment orchestration
A payment orchestrator is a company that connects to many different payment providers and adds value added services.
In the context of disbursement of humanitarian aid, this includes:
Connections to card issuing, mobile money and account-to-account payment providers around the world, either existing or the ability to quickly add them
Software for charity staff to manage disbursement in bulk and view reports
API to automate disbursement and reporting where possible
Mobile app for beneficiaries to view their grant and access the payment methods
Orchestrators are different from aggregators. Aggregators earn money on every transaction and are thereby incentivized to steer the charity to the highest margin payment options. Orchestrators are software providers that charge for their software but pass payment costs through at cost or let the charity contract directly with the payment provider. This means orchestrators are incentivized to steer charities to the payment providers that best meet their needs.
Why payment orchestration is the future of global cash disbursement
Orchestrators can connect to far more payment methods than a single charity could because they can spread the cost of connecting over many customers.
Having more payment methods results in a number of benefits to global humanitarian aid charities. They can:
Use the lowest cost payment method for every situation
Choose payment methods with appropriate compliance process for every situation
Get greater global coverage
Improve their negotiation position with payment providers by avoiding vendor lock in
Orchestrators also act as procurement sourcing agents for payment methods, helping charities select the right local providers and negotiating better fees by having a better understanding of cost structures and competition.
Using an orchestrator also means the charity has to only implement a single integration. This offers additional benefits:
Consistent processes across all payment methods
Consistent reporting and visibility across all payment methods
Lower technical integration costs
About Yordex
Yordex is a payments orchestrator helping humanitarian aid organisations disburse funds globally instantly and at low cost. To find out more, please contact us.
Sources: Worldpay Global Payments Report 2024 McKinsey, the future of payments in Africa UNOCHA forecasts
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Embedded banking is the practice of integrating banking services like accounts, payments, and lending into non-financial products or platforms. For example, an e-commerce website offering digital wallets or buy-now-pay-later options at checkout are embedded banking.
The embedded banking market is expected to generate $110 billion revenues by 2032 up $13 billion today. Those numbers suggest that embedded banking is something customers couldn’t do before just like for example AI.
That is not true though. In this article I will show embedded banking always was big and the predicted growth is just a change in the way the service is delivered. That matters because it means banks and technology providers should focus not on delivering a new customer service but on making it easier for platforms to deliver an already existing service.
Lending
Let’s start with the most iconic of embedded banking services : buy-now-pay-later (BNPL).
This is definitely not a new service. Shopkeepers have allowed their customers to keep tabs and pay later for millennia and businesses have offered 30 of 60 day payment terms for centuries. Business customers have trillions of dollars of debt outstanding to their suppliers today.
What is new about BNPL is that this debt can now be moved to the balance sheet of a financial service provider like Klarna rather than the supplier’s own balance sheet. What is also new is that someone like Klarna is better at assessing credit risk than the supplier which means credit can be extended at lower risk to more customers. Because providing credit encourages sales, more credit means more sales.
Payments
There are two types of embedded payments: taking payments and making payments.
Taking payments has always been embedded. Every non-bank accepts payments. For taking payments, ‘embedded payments’ is therefore a tautology: non-embedded payments don’t exist.
Making payments is different. Not many non-banks make payments on behalf of their customers. One type of business that has done this are marketplaces who often pay marketplace sellers on behalf of marketplace buyers.
What is new in embedded banking is that marketplaces can now create separate bank accounts for each of their marketplace buyers instead of receiving all money in their own account and paying out from there. This means marketplaces no longer have to be the buyer of record which makes it possible for anyone to become a marketplace. For example, accounting and ERP software providers can now become marketplaces and pay all of their customers’ suppliers.
Disbursements
Disbursements are a special type of payment where there isn’t a simultaneous exchange of goods or services in exchange for a payment but a one-way transfer of money only. Examples of disbursements are government benefits, charities disbursing money to beneficiaries and insurers paying claims. Salary payments and corporate expenses have many characteristics of disbursements as well.
Just like taking payments, disbursements have always been embedded. Non-embedded disbursements don’t exist.
What is new in embedded banking is that non-banks can now disburse money by issuing cards or electronic wallets to their beneficiaries. This has a few benefits: it means the disbursement can be instant, it means the beneficiary doesn’t need to have a bank account making it more suitable for unbanked or poorly banked beneficiaries and it means the disburser continues to have visibility and control over how the money is spent.
Conclusions
Embedded banking has always existed. Today’s technology just allows non-banks to deliver embedded banking in a more efficient way which in turn makes embedded banking possible in more situations.
The main job of banks and technology providers is therefore not to chase end customer demand but to make it easier for platforms to offer embedded banking.
Yordex makes it easy for any business to embedd banking. To find out more, please contact us.
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The United Nations estimates that nearly 300 million people around the world will need humanitarian aid in 2024.
In 2023, the UN estimated that global aid needs reached a high of almost $57 billion, a number that will continue to rise over the coming years as new conflicts, climate change and resulting rising food insecurity means more people need help.
The use of cash is rapidly declining around the world
At the same time, the way this money needs to reach beneficiaries is changing. As an example, 91% of payments in Nigeria in 2019 were in cash. In 2023, that number had dropped to 54% and it is expected to drop further to 42% by 2027. In Nigeria cash is being replaced by cards, digital wallets such as Paga, PayPal or Carbon and account-to-account transactions.
India, Brazil, Ghana, Kenya and Senegal are other examples of countries that are transforming equally fast, but the trend away from cash is global. Cash as a % of total payments fell by 8% globally in 2023, and is expected to decline by 6% a year in the next few years. Like in Nigeria, cards, digital wallets and account-to-account transactions are expected to replace cash as well as mobile money in countries such as Kenya, Senegal and Bangladesh.
What this means for humanitarian aid charities
This rapid move away from cash is both good and bad news for global charities.
The good news is that digital payments have important benefits over cash. They allow money to be disbursed instantly anytime anywhere in the world and time is always of the essence in global humanitarian aid. Secondly, digital payments are easily automated which not only reduces manual work but also reduces errors. Finally, it is easier to trace digital payments which leads to increased transparency and control.
Prepaid cards in particular have great potential in global humanitarian aid. Their reduced compliance requirements support financial inclusion by serving underbanked consumers. The ability to top them up instantly allows for instant disbursement and their global acceptance means they can be used anywhere in the world.
There are also some downsides to digital payments. The first is that the increased transparency combined with banks being under increased pressure to comply with anti-money laundering regulations can slow things down. This is particularly an issue in global humanitarian aid where it may be impossible or impractical for beneficiaries to provide all the documentation required to pass the banks’ Know Your Customer (KYC) checks.
The second downside is that, apart from cards, the new digital payment methods are globally fragmented. Every country has their own digital wallets, account-to-account and mobile money schemes. Even issuing cards is local. Acceptance of Visa and MasterCard is global but licences to issue cards are local.
Many of these issues can be overcome by using a payment orchestrator. To explain why, let’s look at what payment orchestration is.
What is payment orchestration
A payment orchestrator is a company that connects to many different payment providers and adds value added services.
In the context of disbursement of humanitarian aid, this includes:
Connections to card issuing, mobile money and account-to-account payment providers around the world, either existing or the ability to quickly add them
Software for charity staff to manage disbursement in bulk and view reports
API to automate disbursement and reporting where possible
Mobile app for beneficiaries to view their grant and access the payment methods
Orchestrators are different from aggregators. Aggregators earn money on every transaction and are thereby incentivized to steer the charity to the highest margin payment options. Orchestrators are software providers that charge for their software but pass payment costs through at cost or let the charity contract directly with the payment provider. This means orchestrators are incentivized to steer charities to the payment providers that best meet their needs.
Why payment orchestration is the future of global cash disbursement
Orchestrators can connect to far more payment methods than a single charity could because they can spread the cost of connecting over many customers.
Having more payment methods results in a number of benefits to global humanitarian aid charities. They can:
Use the lowest cost payment method for every situation
Choose payment methods with appropriate compliance process for every situation
Get greater global coverage
Improve their negotiation position with payment providers by avoiding vendor lock in
Orchestrators also act as procurement sourcing agents for payment methods, helping charities select the right local providers and negotiating better fees by having a better understanding of cost structures and competition.
Using an orchestrator also means the charity has to only implement a single integration. This offers additional benefits:
Consistent processes across all payment methods
Consistent reporting and visibility across all payment methods
Lower technical integration costs
About Yordex
Yordex is a payments orchestrator helping humanitarian aid organisations disburse funds globally instantly and at low cost. To find out more, please contact us.
Sources: Worldpay Global Payments Report 2024 McKinsey, the future of payments in Africa UNOCHA forecasts
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A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!
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The care sector plays a vital role in supporting individuals’ physical, mental and emotional wellbeing. As a result of recent events such as the COVID-19 pandemic, there has been a growing trend towards streamlining payments, automating reporting and transitioning to cash.
Potens is a prominent player in the care home sector. They grappled with visibility and control over expenses made locally in their 40 residential and 36 supported living homes. To get that visibility and control, they turned to Yordex.
Challenge
Potens needed help managing payments across multiple locations, impeding efficient payment monitoring and cost allocation. The lack of customisation in their existing financial tools stopped Potens from gaining a detailed overview of their spend.
Yordex Solution
The Yordex team listened to Poten’s feedback and collaborated to create a tailored reporting solution via the Yordex API, providing Potens with a consolidated statement of accounts across their numerous services. This eliminated the need to export each service account individually, streamlining the process.
To further enhance reporting , expense data can easily be exported to customisable reports, tailored to specific needs and based on the data available within the platform.
In addition to reporting, Potens utilises Yordex’s other key benefits to improve its spend and payment administration
Furthermore, every spend made with a Yordex Card automatically generates an expense entry within the platform. These expenses could then be reviewed, categorized, and queried directly within the system, saving valuable time and resources that could be reallocated to other responsibilities
Additionally, by implementing guard rails on spending, such as ATM withdrawals, and merchant blocking at a per-card level, Potens gained oversight of spend details by their staff. This not only ensured adequate financial controls but also facilitated audit compliance.
Overall, Yordex’ robust administration features empowered Potens' caregiving team with more autonomy, allowing them to make contactless payments securely. This improved their comfort and peace of mind and provided finance heads with increased visibility and control.
Results
Streamlining payments and going cashless with Yordex has given Potens, like many of our clients in the care sector, a range of benefits including enhanced operational efficiency, improved security, increased convenience for residents and caregivers and access to valuable insights.
As a digital payment platform, Yordex provides valuable data insights that can support informed decision-making in the care sector. The bespoke report developed by Yordex has become a best practice model, empowering Potens to:
Attaining granular Insights: Potens now has a comprehensive view of all accounts through a consolidated reporting statement, enabling detailed analysis of spending patterns.
Enhance Decision-Making: Armed with real-time data, Potens' leadership can make informed decisions promptly, providing Finance teams with more visibility into cost attribution.
Improve Operational Efficiency: Yordex's solution has allowed finance teams to reduce time spent on manual tasks
Conclusions
The partnership between Yordex and Potens exemplifies the transformative impact of our tailored payment software on the care sector. Yordex's ability to understand Potens' unique needs and provide a customised solution has not only empowered Potens with enhanced business insights but has also set a new standard within the care home industry.
Embracing the benefits offered by the platform not only saves time and effort but also creates a safer and more convenient environment for all stakeholders.
With Yordex's API-first platform and comprehensive expertise across our team, we are uniquely positioned within the market.
As the care sector continues to evolve, Yordex is committed to driving positive transformations in service delivery and ensuring high standards for residents, caregivers and administrators alike.
The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.
Static and dynamic content editing
A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!
How to customize formatting for each rich text
Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.
Embedded finance is one of the biggest revenue growth opportunities for B2B SaaS providers, service providers and marketplaces (collectively referred to as “B2B platforms” in this article).
Juniper Research predicts global revenue from embedded finance will exceed $183 billion in 2027, 3 times more than the already considerable $65 billion generated in 2022.
Embedded finance is loosely defined as a “non-financial software platform providing financial services”. It usually brings up the image of consumers buying home furnishings or clothing online on credit. However, B2B makes up over two-thirds of all payments globally and it is in B2B where the majority of this growth lies.
Payments are still surprisingly manual in many businesses and automating payments is a major value add B2B platforms can offer their customers. Offering payments will also generate new payment revenues and increase service usage by making it easier for their customers to buy on their platform. On the consumer side, merchants offering Buy-Now-Pay-Later have seen a 60% increase in basket size.
The embedded finance implementation challenges
While the opportunity is large, there are also important challenges for B2B platforms who want to embed financial services. In our area of card issuing and payouts, implementation can take 18 months and $2m+ and that is just to connect to one provider. And you will likely have to integrate with multiple providers.
In this article, I will summarise the top-5 challenges B2B platforms face when implementing embedded finance. I will end this article by explaining what is required to overcome these challenges.
1. Selling a financial product is different from selling SaaS
When offering financial services to larger businesses, your sales team will have to sell financial services to controllers or CFOs. They may not be used to dealing with this audience and the questions and objections they raise.
SMEs may not have a controller or CFO and the service may be sold to the CEO, head of sales or head of marketing but even then finance specific questions and objections will come up.
2. Compliance and regulation are hard
To offer embedded finance services you have to work with white label financial service providers. They are under pressure from regulators to ensure the rules are followed. Because B2B platforms own the customer relationship, the financial service provider has to pass some of their responsibilities over to you.
This requires training and processes that your organisation may not be used to. It also requires that you have people in your organisation who understand the relevant regulations and can make sure the right procedures are followed. These people are expensive, in demand and may be underemployed when you first start out.
3. Financial services require a different product expertise
B2B platforms are often driven by visionary founders and product teams. They are deep experts in their target market and know what their customers want. However, they are less likely to know what the CFOs and controllers of their customers want when it comes to financial services.
4. B2B platforms will need multiple financial service providers
Many B2B platforms have a regional or even global customer base. Most financial service providers have a limited geographic footprint because they need licenses everywhere they operate. That often leaves a mismatch between the B2B platforms countries and those of their financial services providers.
Additionally, most financial service providers focus on just a few products, e.g. card acquiring, card issuing, FX, lending etc. B2B platforms often need many or all of these.
Both of these issues mean most B2B platforms have to work with multiple providers and stitch the solution together themselves.
5. The best providers change over time
There is still a lot of innovation happening in the embedded finance market. The best provider for you today may not be the best provider for you tomorrow.
Additionally, some providers have a low or no setup cost but higher marginal cost which makes them ideal when starting out. Others have a higher setup cost but lower marginal cost, making them preferred when you already have high volumes.
You are therefore likely to have to switch providers over time, again driving up costs.
How B2B platforms can address these challenges
The challenges highlighted in this article are evidence of a missing layer or providers that solve these challenges.
At Yordex, we're creating this layer. Functioning as an orchestrator of financial service providers, we eliminate the need for engaging with multiple financial service providers. Additionally, we offer a diverse range of value-added software and services to assist you in offering the best service to your customers, simplifying compliance, and avoiding having to integrate again and again.
To find out more about how Yordex can help you launch embedded payments in weeks, please contact us.
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Cross-border payments providers like Wise, Revolut and Verto have added card issuing to their offering in the last few years.
Traditionally setting up a card program has been expensive. However, with the recent emergence of banking-as-a-service, costs of both implementing and operating card programs have come down by an order of magnitude.
In this article I will first look at why all cross-border payment providers should offer cards. I will then describe how modern technology helps you implement a robust and scalable card program quickly and at low cost.
Why all cross-border payment providers should offer cards
The FinTech revolution of the last few years has reshaped customers’ expectations, both business customers and consumers. While in the past financial services providers sold financial products, now customers demand solutions.
Offering solutions means that financial service providers are expected to support entire use cases end to end. For businesses the use case may be treasury management for global SMEs or global expense management for businesses with a traveling workforce.
Businesses no longer just want to move money from one place to another. They want to move the money and then use it. Because more and more is paid on cards, from day-to-day expenses to software subscriptions, cards are an essential element in using money.
Many cross border payments providers will know about this already as their customers are increasingly asking them for cards. There are additional reasons to offer cards though.
Revenue is one of them. Card interchange revenue can be up to 2% of the gross payment value, often higher than FX revenue. With the right setup, FX revenue on cards is kept in-house.
Branding is another. Offering cards signals to customers that you are a modern provider with a great user experience.
Setting up a card program - the old way
While demand for cards has gone up, costs have come down dramatically over the last few years.
To set up a card program, cross-border payment providers used to have to set up their own card BIN in every country, integrate their core systems with a card processor for the processing of transactions and settlement of funds and implement customer support, card management, transaction monitoring and other card specific functions.
To solve the problem end to end, they would also have to implement expense management software and a mobile app for end-users.
Altogether implementing cards would cost a couple of million dollars and 18 months. It would then cost a similar amount again to operate the program each year.
Setting up a card program - the modern way
Competition in the banking-as-a-service (BaaS) market has drastically lowered prices to set up card programs in the last few years. In addition, merchant acquirers like Adyen and Stripe have entered the market with a different commercial model, allowing customers to set up a card program with zero setup fees.
No BaaS provider offers cards for every currency, but BaaS orchestrators like Yordex help cross-border payment providers offer a truly global proposition through a single integration.
These orchestrators also offer value added software including expense management, masspay and mobile apps and value added services such as customer support for cards.
Finally, BaaS orchestrators allow you to offer the right features at the right time in the right place. For example, credit, Google and Apple Pay, single-use virtual cards, multi-currency cards or an integration with your core systems may not be essential at launch but they may become more important later. BaaS orchestrators allow you to launch quickly and with the minimal required feature set and adjust when demand becomes clearer.
Conclusions
Customers just no longer want just financial products , they want solutions. Cross-border payment providers are impacted even more by this than banks.
Cards underpin a modern financial service user experience and all cross-border payment providers will have to offer them.
Instead of spending millions of dollars and 18 months to launch a card program that only works in one or a few countries and that you are not sure is right for your specific customer base, we recommend you take an agile approach: launch a global card program quickly, see how your customers use cards, adapt and scale the program over time.
To find out more about how Yordex can help you launch a card program the agile way, please contact us.
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A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!
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The FinTech revolution of the last 10 years has created the ‘banking-as-a-service’ (BaaS) industry including companies like Marqeta, Nium, Modulr and Clear Bank. Recently, merchant acquirers like Stripe, Adyen and Checkout have also entered this market.
These companies make it faster and easier to launch a neobank or payments business by offering white label banking services such as holding funds, connecting to local payment systems and issuing cards.
Neobanks can also use cloud banking software providers such as Thought Machine, Form3 or Mambu. These providers offer technology and their customers need to operate the banking service themselves. This is still sometimes called banking-as-a-service because it is banking software operated as software-as-a-service.
Finally, global commercial banks like Citibank, JP Morgan Chase and HSBC also offer access to their banking services by API. They also call their services banking-as-a-service but they usually don’t target neobanks or payments businesses. They mostly target corporate customers who want to directly integrate banking services with ERP or Treasury management systems.
The term ‘banking-as-a-service’ has therefore come to mean three slightly different offerings:
White label financial services for neobanks and payments businesses
Cloud-based banking software for banks
Banking APIs for corporate customers
To add to the confusion, you will also hear the terms ‘embedded finance’, ‘embedded banking’ or ‘embedded payments’. How these terms differ from banking-as-a-service is explained in this article.
What is open banking
Open banking originated from a push by payment regulators to make the financial services market more competitive by allowing anyone to give non-banks access to their bank account.
Credit checking has been the most popular use case for open banking until now. Open banking allows credit providers to instantly check the credit worthiness of customers by getting access to their bank account history.
The ultimate goal of open banking however is to enable account-to-account payments (bank transfers). Regulators are keen to create competition for Visa, Mastercard and Amex by allowing consumers to pay directly from their bank account in shops and online.
The most successful account-to-account schemes have been those where a single operator manages the service across all local banks. Examples are FedNow in the US, PIX in Brazil, UPI in India, iDEAL in the Netherlands and Blik in Poland. Strictly speaking this doesn’t count as open banking because access is managed by a single operator but it does achieve the same objective of making account-to-account payments competitive with cards. For example in the Netherlands, 62% of online payments are made using iDEAL.
What is the difference?
The difference between open banking and the different flavours of banking-as-a-service is explained in Figure 1. In this picture the orange arrow indicates the main difference with the column before.
Figure 1: open banking vs banking-as-a-service
Open banking is API access to existing bank accounts for account balances and bank transfers only. The bank account owner has to login every time. The benefit is that this access is mandated in many countries so it works for every bank account in those countries. The downsides are that the user experience is clumsy because the user has to login every time and that it often doesn’t work for recurring or scheduled payments, card payments or direct debits.
Banking APIs provide API access to existing bank accounts but now for all banking services. The bank account owner also no longer has to login every time. The benefits are that the user experience is good and that all banking services can be offered. The downside is that it requires platforms to have a commercial relation with the customer’s bank which becomes problematic if they have many customers all using different banks. Other downsides are that today only a few banks offer this service and the ones that do all have different APIs making integration expensive.
White label banking provides API access to new bank accounts for all banking services. ‘New bank accounts’ means the customer needs to create a new account to use the service. The benefits are that the user experience is good, that all banking services can be offered, that it requires only one contract and one API integration and that it works for all customers. Another important benefit is that wholesale banks will share the banking revenues so the provider can now earn money from banking services, in particular card payments, FX and interest on deposits. The main downside is that the customer has to transfer money to a new bank account and that some payments and compliance knowledge is required.
Cloud banking software is software used to operate bank accounts. The provider gets all the benefits of running a bank account (provided they also hold a banking license) but they also have to do all the work.
So which one is best?
Which type of service is best for you depends on what you want to do.
Open banking is great for companies needing to do credit checks. It is not so great yet for payments but the open banking providers and regulators are working hard on improvements. Open banking will never be right for platforms who want to earn revenue from providing banking services though.
Banking APIs may be right for you if you are a corporate customer and you want to integrate your existing bank accounts to your ERP system. It is not great if you are a platform and want to offer services to many customers.
White label banking is the optimal solution for platforms wanting to earn revenue from offering financial services to their customers. It is also a good solution for neobanks who want to be 'asset light' meaning they want to focus mostly on customer acquisition and customer service and are happy to outsource most of their back office. Over time, I expect that some traditional banks will want to go asset light as well.
Cloud banking software is for neobanks that want to control their own back office and for banks that want to replace legacy on-premise banking software with cloud hosted software.
About Yordex
Yordex is a banking-as-service orchestrator. We make it easy for platforms to implement white label banking.
We connect to a global network of banking-as-a-service providers which allows our customers to use the optimal provider in every country. This improves payment margins by over 30% and gives global coverage and resilience. We also offer a range of value added software and services which reduces the time to implement white label banking by over 70%
For more information or a free-of-charge analysis of how much you can save by using a white label banking orchestrator, please contact us.
What’s a Rich Text element?
The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.
Static and dynamic content editing
A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!
How to customize formatting for each rich text
Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.
The FinTech revolution of the last 10 years has created the ‘banking-as-a-service’ (BaaS) industry including companies like Marqeta, Nium, Modulr and Clear Bank. Recently, merchant acquirers like Stripe, Adyen and Checkout have also entered this market.
These companies make it faster and easier for platforms and neobanks to offer financial services by offering white label banking services such as holding funds, connecting to local payment systems and issuing cards. A detailed explanation of banking-as-a-service can be found here.
What is embedded finance?
Embedded finance is integrating a financial service in a non-financial product. It includes embedded payments, embedded banking, embedded insurance and embedded investments.
Examples of embedded finance are:
An e-commerce website taking payments and buy-now-pay-later at the checkout (embedded payments and embedded lending respectively)
An expense management or accounts payable platform offering credit cards and invoice payments (embedded banking)
A digital advertising or affiliate marketing platform making card payments on behalf of their customers and offering their customers a credit line (embedded banking)
A payroll software company paying employees directly (embedded banking)
An employee relocation platform managing the entire relocation including supplier payments and allowances (embedded banking)
A nonprofit organization disbursing funds to its beneficiaries by issuing cards and paying out on that card (embedded banking)
A music royalty platform distributing funds from streaming services and venues to labels and artists (embedded banking)
A travel website offering insurance (embedded insurance)
What is the difference?
As described here, the term banking-as-a-service is used broadly while embedded finance is only used in situations where the financial services is embedded into a non-financial service such as the ones listed above.
However, when looking in more detail, the situation gets blurry.
The first reason is that the products are similar. Embedded finance customers use white label banking providers but those providers also sell to regulated businesses. Embedded finance therefore doesn’t exist as a separate product.
The second reason is that there is nothing stopping non-financial services businesses from becoming regulated. For example, many retailers have financial services arms. We expect many embedded finance customers in other industries to do the same over time.
The only real difference therefore is the end-user experience: in embedded finance the service doesn't feel like a banking service. Then again, banking services 30 years ago felt very different from today so maybe in 30 years embedded banking will just be banking?
Does the difference matter?
No, it doesn’t.
Banking-as-a-service and embedded finance are here to stay. A recent research report by Market Research Future predicts the market will grow by 15% per year to $66 billion by the end of 2030.
Every business that deals with transactions or money should think of itself as a bank and seamlessly weave financial services into their product. This will make their services easier to use, more sticky and more profitable.
About Yordex
Yordex is a banking-as-service orchestrator. We make it easy for platforms to implement white label banking.
We connect to a global network of banking-as-a-service providers which allows our customers to use the optimal provider in every country. This improves payment margins by over 30% and gives global coverage and resilience. We also offer a range of value added software and services which reduces the time to implement white label banking by over 70%
For more information or a free-of-charge analysis of how much you can save by using a white label banking orchestrator, please contact us.
What’s a Rich Text element?
The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.
Static and dynamic content editing
A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!
How to customize formatting for each rich text
Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.
The FinTech revolution of the last 10 years has created the ‘banking-as-a-service’ (BaaS) industry including companies like Marqeta, Nium, Modulr and Clear Bank. Recently, merchant acquirers like Stripe, Adyen and Checkout have also entered this market.
These companies make it faster and easier for platforms and neobanks to offer financial services by offering white label banking services such as holding funds, connecting to local payment systems and issuing cards. A detailed explanation of banking-as-a-service can be found here.
These BaaS providers are now starting to look beyond the FinTech market to also serve non-FinTech customers and with good reason. We believe that every business that helps is customers buy, sell or manage money should think of itself as a bank and integrate financial services into their services. Even larger businesses that make a lot of payments would benefit from using BaaS providers who are often cheaper and easier to integrate into software than traditional banks.
Why banking-as-a-service in its current form is not ready for non-FinTechs
There are however important differences between FinTechs and non-FinTechs:
FinTechs have financial services knowledge and compliance teams in-house. Many non-FinTechs don’t have these skills.
Most FinTechs are present in only a few markets. Many non-FinTechs, in particular businesses in the B2B software and service sectors are global
FinTechs will process millions of transactions and can therefore spend more time integrating. Non-FinTechs may have much lower volumes and need a more out-of-the-box service
As a result, banking-as-a-service providers struggle to service non-FinTechs adequately. Their product assumes advanced financial services and compliance skills which means non-FinTechs need to bring these skills in-house which is time-consuming and expensive. They often also don't have the global coverage non-FinTechs need.
Banking-as-a-service orchestrators solve this problem.
What is a banking-as-a-service orchestrator?
A banking-as-a-service orchestrator fulfils a number of functions:
Select and connect to multiple banking-as-a-service providers to offer global coverage and lower fees from using the right provider in every country and from strengthening their negotiation position
Offer value-added services to make the service more out-of-the-box. These may include Know Your Customer (KYC) automation, payment reconciliation, payment scheduling and user interface components for banking and payment apps
Provide compliance knowledge and help the customer meets its compliance requirements
This offers a number of benefits to non-FinTechs. Multi-sourcing banking-as-a-service providers increases payment margins by more than 30% while a single banking-as-a-service API and other value-added services reduce time-to-market and implementation costs by up to 70%. Savings from compliance support services are harder to quantify but hiring your own compliance team and putting in place company wide compliance processes yourself is expensive.
How to choose the right banking-as-a-service orchestrator
There isn’t a one-size-fits-all for banking-as-a-service orchestrators. You have to choose the one that fits your business. Here are some criteria to look out for:
Geographic coverage : an important reason to work with a banking-as-a-service orchestrator is their geographic coverage. Not every country in the world has a thriving banking-as-a-service market yet, but your banking-as-a-service orchestrator should be able to get you to at least 80% of your spend.
Sector knowledge : value-added services, training and compliance are core components of the banking-as-a-service orchestrator model and they differ by sector. At a minimum your orchestrator is specialized in B2B or B2C just like you but ideally they understand your specific sector and have worked in that sector before.
Savings analysis : a banking-as-a-service orchestrator should be able to explain how they will increase payment margins by more than 30%, ideally using a detailed country-by-country savings analysis.
About Yordex
Yordex is a banking-as-service orchestrator. We make it easy for platforms to implement white label banking.
We connect to a global network of banking-as-a-service providers which allows our customers to use the optimal provider in every country. This improves payment margins by over 30% and gives global coverage and resilience. We also offer a range of value added software and services which reduces the time to implement white label banking by over 70%
For more information or a free-of-charge analysis of how much you can save by using a white label banking orchestrator, please contact us.
What’s a Rich Text element?
The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.
Static and dynamic content editing
A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!
How to customize formatting for each rich text
Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.
Today around 2% of B2B payments are made on card. This number is growing rapidly and Visa believes that around 20% of the B2B payments market is ‘cardable’.
This seems surprising, particularly for suppliers who are paying the high card payment fees. They’d rather use bank transfers or maybe switch newer payment options like open banking or cryptocurrencies.
In this article I will explain why we agree with Visa that cards have a bright future in B2B payments. We suspect some of the new payment methods may struggle if they seem to mistake cards’ strengths for weaknesses.
Let’s look at a few of these alleged weaknesses.
Cards: when lack of security is a strength
Diners was the first ever credit card. It was launched in New York in the 1950s to allow diners to pay on credit. At that time, hackers did not exist and security was provided by security guards. While some security measures have been added since, they are still insecure: one tap or 16 digits is all it takes to pay.
However, as any security expert will know, perfect security does not exist. Good Chief Security Officers will spend most of their budget not on keeping hackers out but on limiting the damage hackers can do once they are in.
The same applies to cards. Credit card companies are forced to accept that fraud is inevitable. They therefore designed a system to limit the damage of fraud. This system includes financial institutions being liable for their clients’ actions and a mechanism to get back your money when fraud has happened (chargebacks). Compare that to APP fraud and crypto currencies where billions become irrecoverable every year despite the technology being more secure.
An additional benefit of the lack of security is the ease of use cards provide. It turns out that buyers like paying with just one tap or by just entering 16 digits. Ease of use is a big part of the success of cards.
Cards: when being expensive is a strength
I used to work at a large payments business where I regularly had customer councils with some of the country’s largest retailers. Invariably, the first 30 minutes of these meetings were taken up by those retailers asking us what we were doing to lower the card payment fees ('interchange').
Unfortunately, retailers don’t decide which payment method is used. Buyers do. Most of the card fees end up in buyers’ pockets either directly as cash back or points or indirectly as protection against fraud (the chargebacks I mentioned before). The remainder ends up in the pockets of card processors who use it to innovate and stay ahead of the new payment methods.
Cards are here to stay
Cards aren’t all bad for sellers. Payments are approved in seconds and once approved, the money is guaranteed. This is particularly useful for B2B sellers. 43% of B2B invoices are paid late and businesses need to employ entire teams to chase payments.
At Yordex we help platforms, marketplaces and large buyers automate and save costs on managing large volumes of payouts. We are payment method agnostic, but like Visa we see cards getting stronger, not weaker. That is why we are extending our global network of card issuers.
What’s a Rich Text element?
The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.
Static and dynamic content editing
A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!
How to customize formatting for each rich text
Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.
