Interchange Too Small for Neobanks
Matt Brown, Co-Founder of Bonsai, on the rise of vertical ERPs
The core problem is that interchange is too small and too shared to support a durable standalone bank product. A neobank only gets a slice of each card swipe, then splits that economics with the sponsor bank and infrastructure providers, so even strong usage can still produce low revenue per customer. That is why the winning model shifts from just offering an account and card to bundling software, lending, and money movement tools that raise revenue and make the account harder to replace.
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In practice, interchange means the merchant pays a fee on each purchase, and that fee is divided across the issuing bank, network, sponsor bank, and often the fintech layer. In the Chime example, every $100 spent drives only about 50 cents to Chime, which shows how much volume is needed before the model becomes meaningful.
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The harder part is activation. Neobanks need customers to switch direct deposit or primary spending behavior, which is a high friction step. Even when onboarding is improved by payroll switching tools like Pinwheel, the economics are still constrained if the only monetization is card spend.
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The newer playbook is to use banking as the entry point, then sell higher margin products around the workflow. HoneyBook added checking, debit, and money tools on top of business software for independents. Kapital paired banking with expense management, bill pay, payroll, and lending, with roughly 60% of revenue from lending and 40% from SaaS.
This is heading toward vertical ERP. The strongest fintechs will look less like thin account wrappers and more like operating systems for a specific customer, where the bank account is the hub and the real monetization comes from software subscriptions, credit, and embedded financial workflows that sit inside daily work.