Fintech faces its reckoning: It’s only a matter of time until the house of cards collapses

“For countless fintech providers, the main source of revenue comes from interchange fees. These are, essentially, the commissions paid to card issuers, payment networks, and banks whenever a consumer buys something.
Many fintech companies rely on interchange fees to varying degrees, although in each case, they account for a significant part of their income. For example, U.S. neobank Chime made $600 million from interchange fees in 2020 alone. From the consumer’s perspective, the interchange is completely invisible, although for many fintechs, it’s a financial lifeline.
This fear is shared by McKinsey, which, in its 2022 Global Payments Report, warned about the impact of rising interest rates and fixed interchange fees on fintechs, noting that the business models of many fintech startups — particularly for buy now, pay later firms — have yet to prove their viability in such choppy macroeconomic conditions.”