Invoicing in the Digital Age: How BIN Sponsor Banks Can Unlock New Revenue Streams

BIN (Bank Identification Number) Sponsor banks play a vital role in the payments ecosystem, acting as the backbone for fintechs and issuers by providing the necessary regulatory and network access to issue payment cards.

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BIN (Bank Identification Number) Sponsor banks play a vital role in the payments ecosystem, acting as the backbone for fintechs and issuers by providing the necessary regulatory and network access to issue payment cards. Traditionally, BIN sponsorship has been seen as a compliance and infrastructure service, with revenue derived mainly from straightforward fee models. However, with the right strategies, BIN sponsor banks can turn this critical function into a significant revenue center.

In this blog, we’ll explore the revenue opportunities for BIN sponsor banks, including detailed examples of pricing models and strategies to maximize profitability.


Revenue Opportunities for BIN Sponsor Banks

1. Setup and Onboarding Fees

BIN sponsor banks can charge fintechs and issuers for setting up BIN sponsorship agreements, network registration, and compliance evaluations. These fees account for the resources required to onboard new clients and ensure adherence to regulatory standards.

Example Pricing Model:

  • One-time setup fee: $25,000–$50,000 per client (depending on the complexity of the program).

  • Network registration fee: $10,000–$20,000 per network (e.g., Visa, Mastercard).

Revenue Potential:

A BIN sponsor onboarding 10 fintechs annually could generate $250,000–$500,000 in setup fees alone.


2. Per-Card Issuance Fees

Sponsor banks typically charge a fee for every card issued under their BIN. These fees are usually nominal but add up significantly with scale.

  • Example Pricing Model:

  • Virtual cards: $0.10–$0.50 per card issued.

  • Physical cards: $1–$3 per card issued (including personalization and production costs).

  • Revenue Potential:

A fintech issuing 1 million virtual cards and 100,000 physical cards annually could generate:

  • Virtual card revenue: $100,000–$500,000/year.

  • Physical card revenue: $100,000–$300,000/year.


3. Transaction Processing Fees

BIN sponsor banks earn revenue from transaction processing fees, which are typically a percentage of the transaction amount.

Example Pricing Model:

  • Processing fee: 0.10%–0.30% per transaction.

Revenue Potential:

A fintech client processing $500 million in annual transaction volume could generate:

  • Processing revenue: $500,000–$1.5 million/year.

4. Monthly Program Management Fees

BIN sponsors often charge a recurring fee for managing the program, including compliance oversight, fraud monitoring, and card network interactions.

Example Pricing Model:

  • Monthly program fee: $10,000–$30,000 per program.

Revenue Potential:

Supporting 20 fintech programs could generate:

  • Monthly revenue: $200,000–$600,000.

  • Annual revenue: $2.4 million–$7.2 million.


5. Interchange Revenue Sharing

BIN sponsor banks typically negotiate interchange revenue sharing agreements with fintechs, earning a portion of the interchange fees from transactions.

Example Pricing Model:

  • Revenue share: 5%–20% of interchange revenue (depending on the agreement).

Revenue Potential:

For a fintech with $1 billion in annual transaction volume and an average interchange fee of 1.5%, the total interchange pool would be $15 million. A 10% revenue share could earn the BIN sponsor:

  • $1.5 million/year.

6. Value-Added Services

Sponsor banks can offer additional services to fintechs and issuers for a premium, such as:

  • Fraud prevention tools: Advanced fraud monitoring systems can be offered for an additional fee.

  • Compliance support: Assistance with ongoing regulatory reporting and audits.

  • Data analytics: Providing insights into transaction trends and customer behavior.

Example Pricing Model:

  • Fraud prevention: $0.01–$0.05 per transaction.

  • Compliance support: $5,000–$15,000 annually per program.

  • Data analytics: $10,000–$25,000 annually per program.

Revenue Potential:

Value-added services for 10 clients could generate an additional $150,000–$400,000/year.


Comprehensive Revenue Model Example

Let’s look at the potential revenue for a BIN sponsor bank supporting 15 fintech clients with the following assumptions:

  1. Each fintech issues 1 million virtual cards and 100,000 physical cards annually.

  2. Total transaction volume per client is $500 million/year.

  3. Monthly program fees: $20,000 per client.

  4. Average interchange revenue share: 10%.

Revenue Breakdown:

Revenue StreamRateTotal Revenue (15 Clients)
Setup Fees$30,000 per client$450,000
Virtual Card Issuance$0.25 per card$3,750,000
Physical Card Issuance$2 per card$3,000,000
Processing Fees0.20% of transaction vol$15,000,000
Monthly Program Fees$20,000 per month/client$3,600,000
Interchange Revenue Share10% of $15M interchange$2,250,000
Value-Added Services$20,000 annually/client$300,000

Total Annual Revenue: $28.35 million.


Strategies for BIN Sponsor Banks to Maximize Revenue

1. Tiered Pricing Models

Offer tiered pricing based on the client’s transaction volume, card issuance numbers, and required services, allowing smaller clients to start with basic plans while upselling premium features to larger clients.

2. Bundled Services

Package compliance support, fraud prevention, and data analytics with core services to increase client retention and boost revenue per client.

3. Client Segmentation

Develop specialized offerings for different types of fintechs (e.g., neobanks, expense management platforms, or loyalty programs) to tailor pricing and services to their unique needs.

4. Upselling Opportunities

Regularly review client needs and offer new services or features as their programs grow, such as expanded fraud protection or advanced analytics.


Conclusion

BIN sponsorship is no longer just a compliance service—it’s a revenue-driving opportunity for banks. By leveraging strategic pricing models, offering value-added services, and embracing automation to improve efficiency, sponsor banks can significantly enhance their profitability while supporting the growth of the fintech ecosystem.

For BIN sponsor banks ready to unlock these revenue streams, the future is bright—and highly profitable.