Wise Is Not Actually a Bank
Many entrepreneurs treat fintech accounts like bank accounts. This video explains the difference between an EMI and a bank, why underlying banking partners matter and how internationally active businesses reduce platform risk.
Transcript excerpt
You opened a Wise bank account. That's what you think you did, but you actually opened an EMI, an electric money institute. Wise is not a real bank. Wise USD rails run through Community Federal Savings Bank. Mercury sits on Choice Financial and Evolve. The front end doesn't control the banking relationship anymore. And here's why it matters. The moment a partner bank underneath decides your geography is too risky or they change your risk vertical, your account is gone. Not in a week, not in 48 hours, now, immediately. And you don't get a say, you don't get an appeal. The partner changes the risk appetite and your account goes and you need to stop business operations immediately and you typically can only withdraw from that account but no transfer goes in anymore. This is why most entrepreneurs get it wrong. They think FinTechs mean innovation, but what it actually means is you're one back-end partner's decision away from losing your entire business operations or your treasury.
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