Crypto must avoid neobank economics to succeed | Opinion

Over the past decade, neobanks reshaped consumer finance with sleek interfaces, no-fee accounts, and instant payments. Yet behind the design revolution sits an awkward fact: 76% of neobanks are unprofitable, even as customer numbers soared into the hundreds of millions.

Crypto-native payment apps now risk walking into the same trap, just with more complex technology. Stablecoin wallets and “crypto neobanks” are racing to launch debit-style cards, cross-border payment tools, and zero-fee offers. The problem is that the neobank model was already fragile in fiat. Once stablecoins compress spreads and settlement fees, copying that playbook becomes even less sustainable.

Payments alone cannot pay the bills

Neobanks were built on card economics. Their main revenue source was interchange — the fee that merchants’ banks pay issuers on each card transaction. But in most major markets, that pool is deliberately shallow. In the U.S., Regulation II under the Durbin Amendment caps debit interchange for large issuers at $0.21 plus 0.05% of the transaction, with a small fraud-prevention add-on. In the EU, consumer debit interchange is capped at 0.2% and credit at 0.3% under the Interchange Fee Regulation.

Those constraints left neobanks struggling to fund cashbacks, glossy apps, and relentless marketing. When customers spent less, fee income shrank; when regulators tightened caps, margins were squeezed further. Several high-profile neobanks have only reached profitability after years in the market and major pivots into lending and fee-based services.

Cheap payments can be a hook, but they are not a business.

Stablecoins squeeze margins even further

Now take that already thin model and add stablecoins. Stablecoins settle almost instantly, with transparent on-chain pricing and minimal FX friction. International stablecoin flows reached roughly $2 trillion in 2024, with particularly strong use in regions where traditional cross-border rails are slow and expensive.

As stablecoins move into mainstream payments through pilots by networks like Visa or integrations in consumer platforms like Zelle, users quickly learn that spreads near zero are possible. That makes it much harder for any crypto neobank to justify fat FX margins or opaque markups on card-based spending. The very technology that makes the experience compelling also erodes the revenue that kept earlier neobanks afloat.

Card-based crypto products also inherit the worst of both worlds. They must maintain KYC, fraud monitoring, and chargeback workflows that satisfy global card schemes while funding on-chain infrastructure, wallet security, and custody arrangements. Instead of replacing legacy costs, many crypto cards simply stack blockchain overhead on top of card-rail obligations.

Cards should be the distribution, not the product

For crypto, the conclusion is uncomfortable but necessary: treating payments as the core business is a dead end. The more sustainable model is to treat cards and everyday transactions as distribution — a way to acquire and retain users. So, value creation happens in higher-margin, on-chain finance.

Some digital banks have already shown this path in fiat. Revenue growth came not from interchange, but from lending, trading, and wealth products that looked more like a brokerage or investment platform than a simple checking account. Crypto platforms have an even broader design space. On-chain swaps, structured yield, access to tokenized real-world assets, and curated portfolios can all generate healthier fee pools than card swipes.

In that architecture, the wallet or card is not “the product.” It is the interface into a deeper stack of financial services — the place where users first arrive, not where the business model stops.

Zero-fee cards only work inside richer stacks

Zero-fee or cashback-heavy crypto cards should not be read as evidence that payments have suddenly become profitable. More often, they signal a bet on monetizing what happens after the first transaction.

A wallet that refunds FX markups and suppresses spreads is effectively giving back the neobank-era revenue line. The assumption is that once a user is comfortable spending stablecoins at the point of sale, they will also trade, stake, allocate to RWAs, or use embedded yield tools inside the same app. The economics are driven by routing, spreads, and performance fees in those higher-value activities, not by the interchange rebate on a coffee purchase.

Seen through that lens, a zero-fee card is closer to an acquisition channel than a margin engine. It functions like a retail loss leader, but is wired into on-chain finance.

Crypto’s chance to break the neobank loop

The broader stablecoin story underscores the urgency of this rethink. Stablecoin volumes are now measured in the trillions annually, and traditional institutions are no longer on the sidelines: the majority of large banks are already experimenting with stablecoins for cross-border payments and liquidity. Stablecoins and $USDC ($USDC) are creeping into retail payments, merchant acquiring, and remittances, often undercutting traditional card fees.

If crypto-native apps respond by rebuilding the neobank model with tokens, the outcome is predictable: years of user growth followed by brutal margin compression and consolidation. The more ambitious path is to accept that payments are infrastructure and to design business models around the higher-value layers that programmable money enables.

Crypto does not need another generation of thin-margin digital banks. It needs wallets and platforms where payments, assets, and on-chain finance reinforce one another, with cards and stablecoins acting as the front door rather than the entire house.