BaaS boosts bank economics beyond interchange
Peter Hazlehurst, co-founder and CEO of Synctera, on matchmaking fintechs and sponsor banks
The durable part of the split is not the exact interchange percentage, it is the idea that a BaaS platform can raise total bank economics by turning old cost centers into new line items. In Synctera’s model, the bank does not just share interchange, it also resells ledger, KYC, and fraud tooling, while Synctera handles the engineering and workflow a small community bank would otherwise need to build itself. That is why the total deal can stay richer for the bank even as interchange alone trends toward a more standardized market rate.
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Synctera expected the raw interchange split to settle toward an equilibrium over time, around 85/15 between fintech and bank, because banks on the marketplace compete on price and launch speed. That points to pressure on the interchange line itself, not on the broader bank revenue stack around the program.
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The bank uplift comes from bundled fees that a bank often could not monetize alone. Synctera described giving banks a ledger they can mark up by 25 to 50 cents per user per month, KYC economics where markup is shared, and fraud tooling priced per transaction, also shared with the bank.
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Across BaaS more broadly, margins usually move upward to the fintech as volume scales. Research on BaaS unit economics shows issuing banks can fall from roughly 20 to 30 basis points of interchange to 2 to 3 basis points at scale, while platforms defend economics by owning more services or by charging usage and software fees beyond interchange.
The next phase is a more utility like interchange split and a more strategic fight over everything around it, compliance tooling, fraud controls, ledgers, workflows, and direct bank connectivity. The winners will be the platforms and banks that can keep enough of the stack in house to make the total program more profitable, while giving fintechs faster launch and lower operational pain.