How Fintechs Make Money: Payments, Loans, Platforms

Why it pays to know how a fintech makes money

A fintech is a company that offers financial services using new technology: payment processing, accounts, loans, invoice purchase, currency exchange. For businesses, such providers are often faster and more convenient than their house bank. But every offer that seems free or very cheap is paid for by someone, and it is not always immediately clear by whom.

This article therefore asks: How do fintechs make their money, and what follows for a business that uses their services? To answer it, we first clarify the revenue sources, then present the model of the two-sided market as the thinking model, look more closely at payments and loans, weigh two readings, and finally derive a revenue source check for choosing your own providers.

The five main revenue sources

Behind the variety of offers there are only a few basic patterns. Most fintechs combine two or three of them.

There is also a source that is hardly visible from outside: many account fintechs issue cards and receive part of the fee the merchant pays for every payment made with them. The customer then pays nothing for the card, and the merchant pays for the payment.

If you do not know what you are paying for, you are usually paying at a point you cannot see.

The thinking model: the two-sided market

The economists Jean-Charles Rochet and Jean Tirole described how two-sided markets work. A platform brings together two groups that need each other, such as cardholders and merchants or borrowers and funders. For the platform, what matters is not only the total price but its distribution: the side whose participation is harder to win is often relieved, and the other side bears most of the costs.

With card payments this explains a familiar picture. Cardholders often pay little or nothing, merchants pay per payment. The more customers carry a card, the less a merchant can refuse it. The same model is used in The digital euro, where the question is whether merchants will accept a new form of payment.

An everyday analogy: a free local advertising paper in your mailbox is not giving anything away. It lives on its advertisers, and they only pay because many households receive the paper. If you are the free side of a fintech, you should ask whom you are the audience for.

Payment services: how a card fee is made up

When a business accepts a card payment, it pays the payment service provider a merchant service charge. It consists of three parts: the interchange fee paid to the bank that issued the card, the fees of the card scheme, and the margin of the payment service provider. In the EU, the interchange fee for consumer cards has been capped since 2015 at 0.2 percent for debit cards and 0.3 percent for credit cards.

For a business, the payment service provider's margin is the negotiable part. Fintechs often advertise a single rate for all cards. That is simple, but with many debit cards it can be more expensive than an itemized model. The Bundesbank's statistics show the volume: with around 14.5 billion payments, the card was the most frequent payment method by number in Germany in 2025, as Paying in B2B describes.

How this business can also fail is shown by the collapse of the payment services company Wirecard in June 2020. A large part of its reported profit was supposed to come from commissions paid by partner firms in countries where it had no license of its own. Whether this business existed on the scale claimed is the subject of criminal proceedings that have not been concluded; the presumption of innocence applies to everyone involved. The sequence is described in Chronicle of an Accounting Scandal.

Loans and platforms: from private investors to funds

Lending platforms connect borrowers and funders over the internet. They usually earn fees from both sides: an origination fee from the borrower and a service fee from the funders. The first such platform launched in the UK in 2005, and smava and auxmoney followed in Germany in 2007.

Pur, Huesig, and Schmidhammer (2026) compared the market leaders in the UK, the US, and Germany over about two decades. Their finding: the business models have converged. Platforms on which private individuals lent each other money became platforms that channel institutional investors' money to borrowers who are poorly served by banks, mainly small businesses, the self-employed, and founders. Private investors are now largely excluded at all three. The authors name regulation, technological progress, and institutional capital as the drivers.

An earlier paper by the same authors on the three largest German platforms showed that they started out similarly and then developed in different directions (Pur, Huesig, and Schmidhammer 2023). Huang and Wang (2023) describe two forms of cooperation between fintechs and banks in China: pure brokering of loans to banks and joint lending. Both bring risks regarding outsourcing, data protection, and market power.

Two readings: cheaper through technology or through other people's money?

Both explanations apply, depending on the provider and the phase. The work of Pur and co-authors shows how strongly external forces shape the models: regulation and the origin of capital have changed lending platforms as much as their technology. Ahern (2025), presented in detail in Fintechs and supervision, also describes how companies settle where the rules are least burdensome.

For a business, I therefore consider the second reading the more cautious default assumption. A price that is only possible thanks to fresh capital is not a lasting price. That is not an argument against fintechs, but it is an argument for keeping dependence small until a provider has proven itself over several years.

The revenue source check before working together

From the two-sided market and the findings I derive a check that I call the revenue source check. It takes half an hour and belongs before every decision for a payment or lending provider.

1. Who pays what?

   List all charges you pay and ask what the other side pays. Watch out for currency markups, minimum charges, and chargeback fees.

2. Where does the provider really earn?

   Check whether the provider earns from your balance, your customers, or your data. The less visible the revenue source, the more carefully you should read the contract.

3. Is the provider licensed?

   Check in BaFin's company database whether it holds a license as a payment or e-money institution or as a bank. How to check partners beyond that is described in Due diligence on business partners.

4. What happens if it disappears?

   Clarify how quickly you can switch, where your money is held, and whether it is kept separate from the provider's own funds.

Why dependence on a platform becomes risky when it changes the rules is described in Dependence on platforms.

What follows beyond the individual case, and where the limits lie

Fintechs have made payments and loans simpler for small businesses. Yet their business models differ less from those of banks than their advertising suggests: they too live on fees, interest, and commissions, only distributed differently and often less visibly. Research also shows that models converge over time once regulation and funders exert influence.

The limits of this assessment are clear. The studies cited mainly look at lending platforms, less at payment services. Specific revenue figures of individual providers were deliberately not reproduced because they change quickly. The breakdown of the merchant service charge is a worked example.

Conclusion: understand the revenue source first, then choose the provider

To the guiding question: fintechs earn from fees per payment, from interest and interest margins, from commissions, from subscriptions, and from currency markups. The model of the two-sided market explains why one side often pays little and the other a lot, and with payments the business is usually the paying side. Lending platforms have developed into intermediaries of institutional capital for small businesses.

For your business this yields a simple rule: choose a provider only once you know how it earns from you and what happens if that changes. A price you understand is worth more than a price that merely looks low.