Whitepaper
Addressing payment challenges for neobanks with Routefusion's unified payment API.
Routefusion is the unified global payments platform built for growth. We simplify international payments for neobanks by offering secure, compliant, and easily accessible global financial infrastructure.
87.5%
Implementation time saved with Routefusion vs. implementing with other platforms.
99.4%
Payment delivery success rate achieved by Routefusion customers.
The Neobank Opportunity
Neobanks, or digital-only banks without physical branches are one of the biggest success stories in banking in the past decade. The global neobanking market was valued at approximately $98 billion in 2023 and is projected to grow to $3.4 trillion by 2032, with a compound annual growth rate (CAGR) of 48.6% from 2024 to 2030. The banks' digital-first solutions and the continuing demand for customer-first convenience offerings are at the heart of this growth story. While neobanks are revolutionizing the banking industry, going global and growing sustainably in any economic or regulatory environment is hard. Routefusion's Unified Payment API, backed by one of the most seasoned teams in the industry, helps neobanks address payments and compliance-related challenges with confidence. This white paper explores how Routefusion's unified payment API can help neobanks overcome these challenges, streamline payment processes, and enhance service offerings.
The Payments Landscape for Neobanks and Inherent Challenges
In order to stay competitive with both existing incumbent banks and an increasingly crowded landscape of new banks, neobanks must stay competitive in not just their digital offerings, but in operational efficiency and customer satisfaction. Cross-border transactions for Neobanks are often complex and costly, regulatory compliance demands are resource-intensive, fraud prevention requires robust security measures, and integrating multiple payment systems is often cumbersome. These challenges can create bottlenecks in operational efficiency and customer satisfaction, impeding future growth prospects.
1. Complex Cross-Border Transactions
There are approximately 180 currencies recognized as legal tender in 195 countries worldwide. Managing multiple currencies requires frequent exchanges and conversions, which can incur significant costs. Fluctuating exchange rates can also introduce volatility and risk, affecting pricing strategies and financial planning. Neobanks need to have the right banking partners across every region, which can be time-consuming and expensive. These traditional banking partners are often slow, expensive, and complicated, creating a bottleneck for neobanks that aim to provide seamless international services. Routefusion's API provides a single access point for multiple payment corridors and networks, enabling neobanks to offer fast, cost-effective, and reliable [cross-border transactions](/products/cross-border-payments). By aggregating various financial institutions and local payment networks into a single API, Routefusion eliminates the need for neobanks to manage multiple partnerships and integrations.
Key Benefits
- Integration time: It takes a customer approximately 1 month to integrate with Routefusion vs. 6 months to integrate directly with a bank or another payments platform.
- Efficiency: Transactions are processed more quickly, reducing the time customers wait for international payments.
- Cost-Effectiveness: Routefusion's smart routing orchestrates payments through corridors that are the lowest cost and most efficient for the customer.
2. Regulatory Compliance
Navigating the complex web of regulatory requirements across different jurisdictions is a major challenge for neobanks, and requires significant resources and expertise - this is one of Routefusion's biggest competitive strengths. Routefusion integrates robust compliance features directly into its API, helping neobanks meet regulatory requirements without additional overhead.
Compliance Challenges Addressed
- Anti-Money Laundering (AML) and Know Your Customer (KYC) Regulations
- Payment Services Directive (PSD2) compliance
- Cross-Border Payments Compliance including foreign exchange controls and sanctions regimes
- Transaction Monitoring and Reporting
- Regulatory Changes and Updates
Routefusion's Compliance Solutions
- End-to-End Compliance Management with automated compliance checks
- Robust AML and KYC Solutions with sophisticated identity verification
- PSD2 and Open Banking Compliance support
- Cross-Border Payments and FX Compliance
- Proactive Regulatory Updates and Adaptation
3. Fraud Prevention
Digital-only banks are particularly vulnerable to cyber threats and fraud. Addressing these challenges requires neobanks to invest in advanced fraud detection and prevention technologies, such as machine learning algorithms, behavioral analytics, and biometric authentication. Routefusion employs advanced security protocols and real-time monitoring to detect and prevent fraudulent activities.
Security Features
- Real-Time Fraud Detection using machine learning algorithms
- Data Encryption for all transactions
- Advanced identity verification combining biometric authentication, document verification, and behavioral analytics
- Real-Time Transaction Monitoring with high precision
- Multi-Layered Mobile Banking Security
- Rigorous third-party risk management
4. Payment Processing & Integration
Neobanks often need to integrate various payment services and gateways to provide a comprehensive financial ecosystem; managing multiple integrations can be complex, time-consuming, and prone to errors. Routefusion's unified API simplifies the integration of various payment services, providing a seamless experience for both neobanks and their customers.
Integration Benefits
- Single Integration Point: Access a wide range of payment services through a single API, including [local payments](/products/local-payments) and [global bank accounts](/products/global-bank-accounts)
- Scalability: Easily scale to accommodate additional payment functionalities and volumes
- Legacy System Integration: Advanced capabilities to connect with outdated banking systems
- Compliance with Regulatory Standards: Built-in PSD2 and ACH compliance
- User Experience: User-friendly interfaces with fast transaction processing
- Cost-Effective Infrastructure: Avoid high costs associated with proprietary technology