Which BaaS Provider to Choose?

In fact, BaaS providers are game-changers for many businesses that want to provide fintech products or services but don’t have the essential infrastructure for it. The possible functionality that providers can enable include online banking, credit issuing & scoring, spendings optimization, branded banking card issuing & others.

But the problem is that such a rapid development of the BaaS industry caused the emergence of many new players on the market. Thus, it’s not always easy to choose one that meets your business needs the best.

So, if you’d like to learn more about one of the most trustworthy BaaS providers & find some tips on how to choose one — welcome!

👍 How You Can Benefit from BaaS

Such services can make it easy for your business to implement fintech services or products into the workflow. But let’s take a look at what _easy _implies.

# 1: Full Financial End-to-End Provision 📑

If you want to start working in fintech without a BaaS provider, it means that you’ll have to do a bunch of actions at various financial institutions. They can include:

• Account opening.
• Getting license.
• Ledger accounting & many others.

So, naturally, since in case you cooperate with BaaS & everything is ready for you to use, you can actually start providing fintech services in a week or so.

Additionally, you would only have to pay for the services of your provider - it’ll really help with cost optimization.

✅ The Difference Between BaaS & Open Banking

There are two terms in the fintech industry — BaaS and Open Banking — that get confused most of the time. So that you can find the most suitable solution for your business needs, we’d like to quickly recall the difference between them.

Open Banking

Open Banking is a process of financial institutions exchanging information with third-party providers (TPPs). Such TPPs are most often fintech or fintech-related start-ups like mobile banking apps, companies that work with cryptocurrency, blockchain, etc.

Normally, the data from different sources would be transferred to a mutual platform to enable an integrated data overview. The exchange channel is arranged by using APIs in most cases. There are 3 main types of such interface:

1. Public — TPPs can access consumer data but have no right to store it.
2. Partner — an exchange of enterprise data. Mostly used for ERP and B2B communications.
3. Internal — an API for data management within one organization.

So, the crucial thing to remember is that different from BaaS providers, the TPPs can’t conduct fintech services since they don't have the legal permission to do so. What happens, in reality, is that they redirect account info from financial accounts to get insights or initiate transactions.

❓ How to Choose a BaaS Provider?

Not all providers can meet your business needs the same way. For example, some of them may not match country-specific regulations, others don’t support a needed scope of features.

Moreover, it won’t be that easy to change the BaaS provider later as all of your customer interactions will be linked to its financial infrastructure. Thus, pay special attention to the following factors when choosing a BaaS provider.

# 1: Business Needs & Budget 📊

First and foremost, your use case is one of the most decisive factors since different companies might be better at certain fintech aspects.

For instance, a provider can be one of the greatest ones in fintech insurance services yet an average when it comes to card issuing. Additionally, if you have a limited budget, some providers can fall away because of the pricing policy, which narrows the range down.

Here are some questions you can ask yourself before choosing a provider: \

• Do I want my customers to be able to get metal branded cards?
• Will clients need dedicated customer support?
• Do I need loyalty points for my business?

Sure thing, each case is unique when it comes to branding needs, but don’t forget to check if providers specialize in branding as well or they just give you a “Starter Kit” in advance.

💻 BaaS Providers: Case Study

In this section, we’ll overview the 5 most widely-spread trustworthy BaaS providers. We’re going to talk about:

• Mangopay
• Solarisbank
• Railsbank
• Treezor
• Marqeta

# 1: Mangopay 🥭

Mangopay is a financial service provider from Luxembourg that works with marketplaces, e-retailers, crowdfunding platforms, and fintech companies (which we’ll talk about).

Their core business is card issuing and payments, however, the features cover quite a wide range of use-cases:

• Fully branded card issuing (debit, credit, prepaid - physical, virtual, tokenized) & transaction processing.
• Accounts funding.
• Production date and personalized insights.
• Incentives and rewards. The name speaks for itself — customers get bonuses for using your cards which improves loyalty.
• Online traveling. They allow travel companies to digitally pay to all third-party tourism-related services with no pre-funding required.
• Lending for small businesses.
• Expense management platform.
• Point-of-sale (POS) enabling — At the “point of sale”, the trader calculates the amount of money owed by the customer for the purchase, indicates this amount, and can prepare an invoice for the customer as well as offer different options for the payment.

As you can see, Marqeta has an extremely wide range of services, that additionally cover use-cases for media & AD agencies, insurance companies, marketplaces, and on-demand services, which is definitely a strength.

Besides, they pay a lot of attention to branding and loyalty improvement. So, if you need a strong branding side, Marqeta might be a great option for this purpose.

However, it might be a little pricier than other players since the US market is generally more expensive.

You can find all API docs on this page.

To start working with Marqeta, you should:

1. Create an account.
2. Get a card product token.
3. Fund a created account.
4. Make a $10 transaction for activation.

💡 Takeaways

We’d say that the most important part of choosing a BaaS provider is that there’s no such a thing as “good” or “bad” — all providers listed here are trustworthy, user-friendly, and are used by millions of people.

However, one can suit your specific use case better than other ones. For instance, if you need a highlight on branding and loyalty, take a look at Marqeta. But if you’re sure that all your target audience is in the eurozone, Treezor can offer you more favorable transaction conditions, compared to other ones.

If you need any help with figuring out the right Tech Stack for your use case & developing it, feel free to reach out to us. We know how to help you!