Payment processing companies are making bold moves to grow their businesses, but they're running into regulatory requirements that could reshape how they operate. These expansions show the challenges that financial technology firms face when they try to do more than just handle payments.
Adyen, a major European payment processor, announced a $335 million deal to buy Orb, an enterprise billing platform. This purchase represents Adyen's effort to move deeper into the financial services business by offering billing solutions to large companies. The acquisition marks a significant investment in expanding beyond payment processing into software that helps businesses manage customer billing and subscriptions.
At the same time, Koho, a Canadian fintech company, achieved unicorn status—meaning it reached a $1 billion valuation. However, the company's real goal is even more ambitious: it wants to become a regulated bank. To do this, Koho must obtain a banking license from Canadian regulators. This license would allow Koho to offer traditional banking services like deposit accounts, not just payment features.
Both situations highlight the regulatory landscape that fintech companies must navigate. When payment firms want to expand into banking services or acquire other financial technology platforms, they need approval from banking regulators. These regulators want to ensure that companies follow rules designed to protect customers and the financial system.
For Adyen, the Orb acquisition means entering the billing software market more directly. Billing platforms help companies track what customers owe and manage subscription services. By owning this technology, Adyen can offer more complete financial services to businesses.
For Koho, obtaining a banking license is more complex. Regulators must verify that the company has proper systems, enough capital reserves, and good management before granting a banking license. This process protects customers' deposits and ensures the company can handle financial emergencies.
These regulatory requirements exist because banks handle money that belongs to millions of people. Regulators must make sure that any company offering banking services can be trusted with that responsibility. The approval processes can take months or years and involve extensive reviews.
As fintech companies mature and grow larger, they increasingly seek to offer services that require banking licenses. Regulators worldwide are developing new rules to handle this trend. These rules aim to balance allowing innovation while protecting consumers and financial stability. Companies like Adyen and Koho demonstrate how the financial technology industry continues to evolve and expand into traditional banking territory.