For years, fintech innovation has predominantly focused on funds flowing in—payments, deposits and revenue collection—because it was easier to implement and required fewer regulatory hurdles. Moving money out has been more complex, historically requiring banking licenses and costly infrastructure. Banking-as-a-service (BaaS) platforms like Lithic, Marqeta and Galileo have helped simplify this, but their high costs made adoption difficult for early-stage startups.
As competition has driven prices down and more vertical SaaS companies have reached the scale to absorb these costs, the opportunity to monetize funds flow out is becoming more accessible—emerging as the next frontier in payments monetization.
This article examines five essential strategies SaaS+ businesses can use to generate new revenue by monetizing funds flow out.
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Payroll Monetization
Payroll monetization offers several strategies, with two of the most impactful being wage issuance via branded debit cards and wage issuance via proprietary bank accounts.
Issuing payroll on a branded debit card allows you to capture the majority of interchange fees1 from transactions. For example, if wages are paid onto a debit card you issue, you can earn up to 200 basis points2 (2%) on every dollar spent using that card.
Another strategy is to issue wages into savings, checking or other banking accounts that you control. These accounts generate revenue through interest earned on deposited balances, creating an additional stream of income.
Companies specializing in embedded payroll solutions like Branch allow payroll to be monetized in a way far simpler than has historically been the case. While you will give up some margin per processed dollar to utilize a tool like Branch, you still stand to recognize more than 100 basis points (1%) per payroll dollar and you can avoid the high startup costs associated with a full scale BaaS implementation or building proprietary capability.
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Vendor Payments: Group Buying Strategy
Group buying is a powerful monetization strategy that leverages scale to drive revenue through multiple mechanisms, including Discounted Sourcing, Dynamic Sourcing, Auto Rebates and Ghost Card Issuing. By consolidating orders across vendors within a category, platforms can negotiate better rates, secure rebates and monetize payments. This approach not only reduces costs but also turns vendor payments into a profit center. Order, a business purchasing marketplace, powers procurement for thousands of fitness facilities. Below is an example of how they could use group buying to lower costs on items like towels.
Discounted Sourcing and Dynamic Sourcing: Instead of each fitness center placing small, individual orders, Order aggregates all towel orders into one large purchase. Once they reach a critical mass, they source bids from multiple vendors, evaluating factors such as price, shipping speed and reliability.
Auto Rebates: With the best offer identified, Order negotiates further, offering upfront payment in exchange for a discount—often as much as 5% (500 basis points). This discount becomes a direct source of profit for Order.
Ghost Card Issuing: Additionally, Order asks if the vendor will accept payment by credit card. If so, they issue a virtual card, fund it and complete the purchase. By paying with their own card, Order earns an additional 2% (200 basis points) from credit card rewards or interchange revenue.
In total, Order captures 7% (700 basis points) in profit on the transaction. For a $100,000 towel order, this results in $7,000 of high gross margin revenue—$5,000 from the auto rebate and $2,000 from ghost card issuing.
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Treasury Management and Managed Disbursement
Treasury management and managed disbursement often go hand in hand, as shown in the example of Kaleidoscope, a scholarship management platform. Organizations like the Taco Bell Foundation provide Kaleidoscope with scholarship funds upfront—imagine a $10 million deposit. Kaleidoscope holds these funds in its treasury, earning interest and generating revenue while securely managing the capital.
Kaleidoscope then executes the managed disbursement process, transferring funds directly to recipients or their educational institutions. This process involves verifying recipient eligibility, collecting and confirming payment details (such as bank, ACH or wire information) and ensuring compliance with disbursement requirements.
Due to the complexity of this process, which includes security checks and payment routing, it is standard for platforms like Kaleidoscope to charge a disbursement management fee—typically between 3% and 5% of the distributed funds.
This arrangement offers Taco Bell Foundation two key benefits:
- Secure Fund Management: Confidence that their funds are safely held and managed.
- Streamlined Disbursement: Kaleidoscope handles the entire distribution process, eliminating the need for Taco Bell to manage payouts or track recipients.
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Card Issuing
We’ve previously discussed card issuing as a monetization strategy in this article. One approach is payroll—issuing wages on a branded debit card, allowing you to collect the majority of interchange fees. Another is ghost card issuing, where a business generates a virtual card to pay vendors who accept credit cards, capturing additional revenue in the process.
A third method of card issuing monetization is distributing scholarships via an issued payment card. This approach offers multiple benefits:
- As the card issuer, the platform (e.g., Kaleidoscope) earns up to 2% in interchange revenue on every dollar students spend using the card.
- This method is convenient, secure and trackable, making it easier for students to access their funds while providing transparency for the issuer.
- Distributing funds directly to students via a card helps prevent displacement, a practice where universities reduce a student’s financial aid by the amount of their scholarship.
Card issuing as a monetization strategy works well when the SaaS+ platform is already the trusted payments partner and the end customer has a specific industry dynamic where there is a legitimate preference to be paid on an issued card, rather than a more traditional form of funds distribution. This is the case with the students in the scholarship industry.
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Invoice Factoring, Revolving Lines of Credit and Debt Issuance
Invoice factoring, revolving lines of credit and debt issuance represent the final major bucket of funds flow out monetization. A great execution example of all three is Order, a company we mentioned previously in this article. Order is able to very effectively underwrite their customers because they’re managing their customers’ procurement and spend. By tracking their customers’ purchases—down to office supplies and equipment—Order builds a strong financial profile, allowing them to assess creditworthiness with precision.
When a customer shows signs of growth, such as opening new locations and likely having a lot of office supply purchasing happening, Order can proactively offer a $250,000 loan. This creates dual monetization benefits: first, Order earns interest as the loan is repaid; second, the loan must be spent on qualifying office supplies within the Order platform.
Like card issuing, debt issuance is also more effective when the SaaS+ platform is already controlling the flow of funds and purchasing, allowing debt payments to be automatically withheld from funds flow and taking advantage of the dual monetization benefits described above.
In Conclusion:
Monetizing funds flow out is no longer an opportunity reserved for the largest fintechs. As infrastructure costs decline and vertical SaaS companies scale, new opportunities to capture revenue are emerging. By implementing these five methods, SaaS+ businesses can optimize payments and turn financial operations into a powerful high-margin profit center.
Whether you are building or investing in a SaaS+ company, analyze both “payments in” and “funds out”. Businesses that were long thought to have only a 3% monetization opportunity often have more than double that when considering both sides of the equation.
- An interchange fee is the fee a merchant’s bank pays to the customer’s bank for processing a credit or debit card transaction. It helps cover the cost of handling the payment, protecting against fraud and offering card perks like rewards.
- A basis point is a unit of measure to describe small changes in interest rates, fees or other percentages (1 basis point = 0.01%). It’s a clear way to talk about small percentage changes, especially in finance where precision matters.
