Taxonomy
Infrastructure distribution
Use this page to decide whether an arrangement in front of you is infrastructure distribution or something else. One financial company supplies a capability, a second builds on it, and the second company's customers use the result.
Definition
A financial company supplies a capability. A second financial company builds a product on it and sells that product to its own customers. The capability reaches those customers, and it reaches them through the second company rather than directly.
Neither party needs a bank charter, and the partner is a financial company rather than a retailer or a software platform. Those two facts are what separate this from the types it is most often confused with.
The test is where the capability ends up. If it leaves the partner and reaches an end customer, this is infrastructure distribution. If it stays inside the partner and is consumed there, it is a technology purchase and it is never counted as distribution.
What it looks like
A payroll platform runs its pay accounts on somebody else's banking core. A payments company issues its cards through an issuing platform. In both, one company's technology reaches people who have never heard of it, because a second company put its own name on the front.
This is how most fintech capability travels. The provider grows by adding partners rather than customers, and the partner ships a product it did not build.
How it differs
| Type | The question it turns on | Answer here |
|---|---|---|
| Embedded finance placement | Is the host a non financial company whose product flow the financial product sits inside? | No. The partner is a financial company. |
| Bank sponsorship | Is a charter the object of the agreement? | No. Neither party needs one. |
| Technology vendor | Is the thing bought consumed inside the company that bought it? | No. It reaches that company's customers. |
| White label | Is the provider undisclosed to the end customer? | Sometimes, and it does not decide the type. Both disclosed and undisclosed arrangements sit here. |
Against embedded finance placement
Embedded placement asks what kind of company the host is. A financial product presented inside a software company's checkout, an accounting platform's dashboard or a repair shop's estimate is embedded placement, and the host owns a customer relationship that has nothing to do with finance.
Infrastructure distribution has a financial company on both sides. The partner is not lending its unrelated customer base to a financial product. It is a financial company building a financial product, and it needs a piece it does not have.
Against bank sponsorship
Bank sponsorship turns on a charter. A chartered bank supplies deposit taking, card issuance or lending authority, and a non bank uses that authority to bring a product to market. The charter is the object of the agreement and no other type turns on one.
Infrastructure distribution is the same movement without the charter. The capability supplied is a platform, a processing relationship or a set of rails, and the provider states plainly that it is not a bank. Where a charter is involved as well, the arrangement is bank sponsorship, because the charter is the scarcer thing and the more precise fact.
Against technology vendor
This is the boundary that matters and the one most often got wrong.
Money flows from the partner to the provider in both. That is not the test and it never was. A revenue share does not make a purchase into distribution, and a flat platform fee does not make distribution into a purchase.
The test is whether the capability reaches an end customer. A claims management system a carrier uses to process its own claims is consumed internally, so it is a technology purchase. An issuing platform whose cards end up in the hands of the partner's customers has left the partner, so it is distribution.
The same provider can be both to different partners, and occasionally both to the same partner under separate arrangements. The type is a property of the arrangement, not of the company.
Boundary cases
A banking core powers a payroll company's employer payments.
Infrastructure distribution. Both parties are financial companies, no charter is the object, and the payments reach the payroll company's employers and their staff.
A card issuing platform is certified as a processor on a card network.
Neither. A certification is an accreditation, not an arrangement to reach anyone. Where certification is announced alongside placement in the network's partner programme, the placement may be marketplace placement, and it is classified on what the announcement says about the programme rather than on the certification.
A fraud detection service scores transactions for a lender's underwriting.
Technology vendor. The scores inform a decision the lender makes. Nothing reaches the lender's borrowers.
A fraud detection service is offered to a lender's merchants as part of the lender's product.
Infrastructure distribution. The same service, a different arrangement, and the difference is that it now reaches somebody past the lender.
A provider supplies rails and is named on the customer's statement.
Infrastructure distribution. Disclosure to the end customer changes nothing here. It is the question white label turns on, and white label additionally requires the product to be sold under the partner's brand.
A provider supplies rails to a company that resells them unchanged to other financial companies.
Infrastructure distribution for the first arrangement. The reseller's own arrangements are separate rows and are classified on their own terms.
A press release says two financial companies have partnered, and does not say what moves between them.
No type. A relationship is established and its kind is not. Nothing is recorded until a source says what the arrangement does, because a type inferred from a headline is indistinguishable on the page from one that was stated.
How it is counted
Infrastructure distribution is a distribution type. It counts in gap statistics and carries a weight below embedded placement and bank sponsorship, because the provider sits further from the end customer than either.
Where a company has both a technology purchase and an infrastructure arrangement with the same counterparty, both are recorded. Only the second is counted.
Part of the Schwaner and Co. partnership taxonomy. Every partnership published against this type carries the source it was read from and the sentence that established it. See what is recorded against it.