Envision a stack
From payments processors aggregators to those that aggregate sponsor bank relationships
Closer to the infrastructure...
Means a higher need for risk / fraud / KYC knowledge
More upfront costs and maintenance but also better unit pricing
Decide if it is worth it
Types of API providers
All-in-one API provider like Bond, Synapse, Unit, Lithic
aka BaaS
They do the hard work with bank partnerships, regulation, 3rd party integrations
Usually pretty fast to get a live card to market
Core processors like Marqeta or Galileo or i2c
Build your own stack
Takes longer
Gets more vendor choices and unit economics
How neobanks monetize
Usually debit interchange
Works in the US albeit not very lucrative in Europe
First profitable neobank was Starling in the UK though
Unit economics matter a lot so maybe you should go down the stack and dive into the weeds
Subscriptions / RTP / memberships / partnerships
Less focused on complexity, more focused on value to the customer directly and quickly
Needs to understand customer problem like no other
Rarely works except with mass market community driven neobanks
Works for non-banks whose core value prop isn't payments related anyways like Shopify
Avoid all complexity and just buy Stripe to get payments
What you are buying with an API provider
Opinions on which product for AML for example
They might be able to always do it better than you like Unit 21
Choice of provider / configurability / third parties
Landscape does change a lot with partner banks, if a BaaS can adapt that for you that's pretty great
Or choose to self build
If it is core to what you do
Dream API is one that allows you to drive when you want to and you can get all the data. not really possible but yeah.
Notes inspired by Simon Taylor and others
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