BankTechPolitics & MoneyRegtech

On approval from OCC, payments platform Adyen lands bank charter

Four years ago, Adyen dismissed reports of seeking a U.S. banking charter license. “We’re not interested or even consider applying for a U.S. banking license,” said Adyen’s former SVP of Strategy Luke Salinas to Bank Innovation in 2017.

But since 2017, fintech has changed immensely. Regulators have have had to acknowledge, sometimes to the chagrin of banks, that fintech companies are capable of providing similar (or better) financial services to consumers.

But as of today, Adyen, a Dutch company, has officially announced that it obtained its US branch license. The Federal Reserve approved its application on May 24, 2021.

“I’m excited to see this positively impact our merchants operating in the US – we’re well positioned to help them grow,” CEO and co-founder Pieter van der Does stated in a press release.

Adyen is not the first fintech to have successfully won approval from the OCC for a bank charter. In July 2020, Varo Bank became the first known fintech company to obtain approval from the OCC.

It’s important to note, however, the two companies have received different charters that come with varying regulatory oversight and specific permissions in what financial services they can offer to customers.

Adyen: Federal Foreign Branch License

Adyen is effectively allowed to offer most financial service offerings relevant to its business dealings, with some hoops to jump through.

  • Agency supervisors. The Federal Reserve Board and State regulators.
  • Licensing tiers. Federal or State.
  • Permitted service offerings. Savings and checking accounts; loans; payments (additional permission needed); OTC derivatives (additional permission needed); and card issuance.
  • Non-permitted service offerings. Cryptocurrency and digital assets; custody of assets.

Varo: National Bank Charter

If you’re going to jump through the hoops and expenses of obtaining a charter as a fintech company, the National Bank Charter is the way to go.

  • Agency supervisors. The OCC and FDIC. Must register as a bank holding company with the federal government.
  • Licensing tiers. Federal or State.
  • Permitted service offerings. Savings and checking accounts; loans; payments; cryptocurrency and digital assets; OTC derivatives; and card issuance.
  • Non-permitted service offerings. Custody of assets.

Regardless of the license, it’s yet another signal that fintech companies want to be banks and banks want to be fintech companies.

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