White-label products or services are essentially rebrandable and resalable items produced by one company to be rebranded and resold by another company. In simpler terms, it’s like a generic product made by one company that other companies buy, put their own logo on, and sell as their own.

In the context of banking, payments, and money transfer, white-labeling is quite common. Here’s a more straightforward explanation along with an example:

General Definition: White-label in banking and finance refers to a service or product developed by one company (the producer) but used and sold by another company (the reseller) under their brand name. The original producer remains hidden in the background.

Dumbed-Down Explanation with Example: Imagine a company, let’s call it “Bank A”, that’s really good at handling money transfers and has all the technology set up for it. However, Bank A doesn’t want to deal with customers directly. There’s another company, “Bank B”, that has a good customer base but doesn’t have the technology for efficient money transfers.

In a white-label setup, Bank A provides its money transfer service to Bank B. Bank B then offers this service to its customers under its own name, as if it was Bank B’s own service. The customers of Bank B use this service, thinking it’s a part of Bank B’s offerings, but in reality, it’s Bank A’s technology and service running behind the scenes.

Transaction Example:

  1. A customer of Bank B wants to send money overseas.
  2. They use the money transfer service available on Bank B’s app or website.
  3. The service, although branded as Bank B’s, is actually powered by Bank A’s technology.
  4. The customer completes the transaction, happy with Bank B’s services, unaware that Bank A is the actual service provider behind the scenes.

In this way, Bank A gets business through its technology without having to manage a customer-facing brand, and Bank B can offer a wider range of services without developing the technology from scratch.

This page was last updated on February 24, 2024.

Share with others...