At FTN.Money, we were recently discussing with one of our guests about the concept of single point failure in the James Webb Space Telescope (JWST) project, and how mission success depends on system-wide redundancy and coordination. One of our colleagues then posed a compelling question: why can’t we apply the same principle to building card programmes and digital wallets?
That conversation sparked the foundation for this article—how fintechs and financial institutions can avoid Single Point Failure 344 (SPF 344) by creating robust, compliant, and scalable prepaid and wallet ecosystems.
What is SPF 344 in Fintech Systems?
Single Point Failure 344 refers to wallet and card infrastructures that depend on one operational, regulatory, or technological component—such as a single BIN sponsor, licensing partner, or payment processor. If this component fails, the entire system could go offline, freezing funds and eroding customer trust.
“SPF 344 is less about one specific flaw and more about the absence of redundancy in crucial infrastructure.” — Payments Risk Council, 2022
Common Triggers of SPF 344
- Over-reliance on a single BIN sponsor without a fallback
- Operating under a third-party licence with no plan for direct authorisation
- Centralised tech stacks that limit modularity or failover
- Weak AML/Compliance controls leading to licence suspension
- No exit plan or service-level assurance from third-party vendors
Example: A UK-based neobank had to lock 80,000 wallets overnight when its EU e-money partner lost its licence—highlighting the urgency of avoiding SPF 344 (Source: FCA Enforcement Updates).
Building a Resilient Wallet or Prepaid System
1. Licensing and Regulatory Readiness
- EMI Licence: Required for issuing e-money or holding wallet balances.
- PI Licence: Suitable for payments and remittance services, not wallet issuance.
- Agent vs. Direct Licence: Agents go to market faster but inherit the risk of SPF 344. Direct licences offer long-term stability.
- Regulatory Sandboxes: Ideal for market testing (UK’s FCA, DIFC, MAS).
2. BIN Sponsorship & Processor Strategy
- Diversify across networks (Visa, Mastercard, UnionPay)
- Ensure processor capabilities:
- Tokenisation (EMVCo compliant)
- Open APIs for onboarding, AML, funding
- Real-time monitoring and regional scalability
- Partner only with PCI-DSS Level 1 certified providers
3. KYC/AML & Onboarding
- For Business Wallets:
- KYB with business registry, UBO data, tax info
- Continuous monitoring of payment behaviour
- For Individual Wallets:
- Tiered onboarding by usage
- eKYC with ID, biometric checks (e.g., Sumsub, Onfido)
- Follow:
- UK’s EMRs & JMLSG
- 5AMLD/6AMLD (EU)
- CBUAE & DFSA regulations
4. Card Issuance and Wallet Interfaces
- Virtual Cards: Real-time issuance for digital use
- Physical Cards: For POS and branding
- Choose networks by region: Visa/Mastercard globally, RuPay for India, UnionPay for China
5. Funding & Payouts
- Top-Up:
- Open banking (UK, EU)
- Card loading
- Agent cash-ins
- Payouts:
- Faster Payments, SEPA, SWIFT
- Mobile wallets (e.g., M-Pesa)
6. Technology Stack
- Use modular cloud infrastructure (AWS, Azure)
- Separate key components:
- Ledgering
- Compliance
- Transaction routing
- Microservices allow targeted recovery and upgrades
7. Monitoring, Reporting & Audit
- Daily ledger reconciliation
- Automated AML screening (e.g., Actimize)
- Data trails for audit compliance
- Appoint MLRO & DPO for governance
SME Wallets vs Individual Wallets
| Feature | SME Wallet | Individual Wallet |
| KYC Process | UBO & business registration | ID check & address verification |
| Use Case | Payroll, B2B payments, supplier management | P2P, shopping, mobile recharge |
| Value Limits | High | Tiered unless upgraded |
| Features | Multi-user, invoicing, API support | Cashback, rewards, budgeting tools |
Avoiding SPF 344: Best Practices
- Maintain multiple BIN and processing partners
- Define backup KYC and fraud monitoring services
- Ensure SLAs cover exits and fallback support
- Run resilience drills and simulate outages
“Redundancy isn’t a luxury in fintech—it’s the foundation of consumer trust.” – BIS Innovation Hub
Conclusion
At FTN.Money, we believe wallet and prepaid programme success lies in intentional design that balances speed-to-market with long-term resilience. SPF 344 is avoidable, but only if redundancy, compliance, and vendor strategy are baked into your product DNA.
References
- FCA Electronic Money Regulations
- European Banking Authority – PSD2 Guidelines
- JMLSG UK Compliance Guide
- BIS Fintech Infrastructure Reports
- Actimize AML Suite
- Sumsub Compliance Tools
