How can BaaS platforms generate new revenue streams outside of interchange fees and what strategy should they undertake to achieve this?

Guest: They could go with either model to be less reliant on interchange really gives the FinTech or the program manager full access to that interchange. And they would then just charge for their services that they're providing. And they could go either model. It really depends on the risk that they're taking and their approach to pricing some of the BaaS players, they're strictly just going to do program management because they ... I'm sorry, revenue share with the interchange because they know that there's a lot more opportunity for revenue to do it that way, as well as they know that they're going to cover their costs, they're going to get a different kind of clients when they do that. Because some clients are going to say, "No, we want all of the interchange." And they'll be shopping around to try to find that.

So, it's really going to have to, they're going to have to decide what their model is, what their business model is and how they want to differentiate from the others, whether they want to take that approach or not. Again, being able to take the interchange allows them to be more flexible with the clients that they're going to take as far as they can take someone that maybe it's more risky because they know that they're going to immediately get the revenue out of that from the interchange.

Whereas someone who, if they're just doing a fee for service sort of model, then they've got a little bit of risk there because the FinTech or the startup may not be able to pay them because they've spent the interchange somewhere else. And now they're waiting, they've got to submit a bill to them and wait for them to pay. Whereas with interchange, they get the funds directly from the network and then they pay out to the FinTech. So, you've sort of got those two different approaches. And as far as the BaaS player wanting to get out of that, or it really just depends on their business model, if they want to do that or not.