High BaaS Program Fees Signal Misalignment
Aaron Huang, Head of Commercial at Productfy, on choosing the right fintech customers
High program fees are usually a sign that the bank is treating BaaS like low risk software revenue instead of a shared growth partnership. In this market, fees sit on top of interchange economics and operational work like disputes, audits, customer support, and compliance. When a bank pushes those costs up front, it usually means the fintech is being asked to fund launch risk alone, rather than getting a partner that expects to win from transaction growth over time.
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BaaS platforms generally monetize through interchange splits, per account fees, and subscription style fees. Because roughly 60% of revenue comes from interchange, the best aligned model is usually lower fixed fees and more upside sharing as volume grows.
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The underlying reason is that money and risk move together. If a fintech takes more of the interchange, it also tends to take on more responsibility for chargebacks, customer service, audits, and other operating burdens. High program fees are another version of that same risk transfer.
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This is also a competitive tell. Marqeta built scale partly by proving reliability and offering better economics at volume, while newer all in one platforms like Unit, Productfy, Bond, and Synctera chased the long tail with simpler packaging. In both cases, pricing signals how much the provider expects to grow with the customer versus bill them before launch.
Going forward, the strongest BaaS relationships will look less like fixed software contracts and more like risk priced joint ventures. As embedded finance spreads beyond pure fintech into software, retail, and vertical apps, banks and platforms that flex on early fees and earn with volume will win the best programs and keep them longer.