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Learn | Embedded Finance

What is an FBO account?

An FBO (For Benefit Of) account allows a company, typically a money services business, to manage funds on behalf of their users in a pooled account setting, without assuming legal ownership of the traditional bank account.

How do FBO accounts work?

Imagine an FBO account as a large post office, with each client having a specific bank account within this pooled structure, akin to personal mailboxes. These mailboxes represent the individual sub-accounts or virtual accounts of the clients. When someone sends money to a specific client, it's akin to mailing a letter or package to that client's personal mailbox.
 
In this scenario, all the mail (money) is stored within the individual mailboxes (virtual accounts), but collectively, it's under the roof of the same post office (the pooled account). Each client's mailbox is unique and securely holds their specific funds, much like an account and routing number.
 
The post office's responsibility, akin to the bank's role, is to ensure that all mail is correctly delivered to and collected from the respective mailboxes. The post office staff (the bank's tracking system) keep precise records of all incoming and outgoing mail, ensuring each client's transactions are accurately managed. By doing so, a trackable flow of funds is created to help combat money laundering and other types of financial fraud.

Who is the owner of an FBO account?

The bank where the FBO account is opened is the owner of the account. In our analogy, if a company (say, "Express Finance") opens an FBO account at a bank ("Secure Bank"), then Secure Bank is like the owner and operator of the post office, while Express Finance manages the individual mailboxes (virtual accounts) for their clients - including maintaining compliance with state money transmission requirements.
 
At Cybrid, we have separate sponsor banks for both our United States and Canadian based operations. This way we are able to provide an Embedded Finance payments experience for both CAD & USD based FBO accounts.

Are FBO accounts FDIC insured?

FBO accounts, including those used for money services businesses, in some circumstances may include FDIC insurance. Specifically, each virtual account under the FBO account can have up to $250,000 in FDIC insurance.

How to open FBO accounts?

Cybrid provides the API infrastructure to operate with an FBO account. This way you are able to create virtual accounts for KYC approved individuals and KYB approved businesses. We've done the heavy lifting of integrating directly with banks in both the United States and Canada that are friendly to flow of funds that involve cryptocurrencies, like Bitcoin & Circle USDC.

How do I get started with Cybrid?

Getting started with Cybrid is a streamlined and developer-friendly process. If you're ready to explore the possibilities with Cybrid, you can begin immediately in our sandbox environment. This sandbox offers a risk-free space for developers to experiment and familiarize themselves with our platform's capabilities, like the ACH API, ensuring a smooth integration with your existing systems.

Once you're comfortable and ready to move forward, the next step involves understanding our pricing structure and the specifics of our contract. For this, we recommend booking time with our experienced sales team. They will provide you with all the necessary information, tailor a plan that best suits your business needs, and guide you through the contracting process.

Our team is dedicated to making your journey with Cybrid as seamless as possible, from initial exploration in our sandbox to final implementation and beyond. Don't hesitate to reach out and start your journey with Cybrid today!

 

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