Banks provide underlying infrastructure to payment companies including trust accounts, prepaid services, bank transfers, card acquiring, connections to networks. Although essential relationships, they can also be challenging to develop.
One reason it is challenging to establish these relationships is that banks need to be cautious regarding their customers and they also need to be sure the customer’s requirements are a good fit for the banks service offerings. Many times payment innovators struggle to establish one sponsoring bank – so getting more than one is even tougher. But this redundancy is essential.
I learned this the hard way as many in the industry have. Unfortunately at the beginning of the prepaid card industry (2006), banks were jumping in. They frequently found once they started that the business was tough. At the time, my company was offering a mobile wallet with two types of account – mobile prepaid without a card, and mobile prepaid with a companion card. Great offering. The bank relationship started out fine – but ended suddenly when the bank made a quick decision to exit prepaid.
We were devastated. We had other bank relationships but none willing to support prepaid. As we dealt with the implications of this decision I vowed to never have a single source for any banking feature. Hard to implement, but easier than unwinding a live service while we brought up an alternative source.