There is an ungodly amount of paperwork to do in order to establish a bank or credit union. Paying someone else to do it, that's going to run into the hundreds of thousands or low millions.
Your typical short lifespan credit union is generally founded by the village idiot with a law degree, who has pretentions of being a big balls businessman.
The key step is to obtain a State Charter. This sounds hard, it's not. The hurdle is basically "do you have a business plan". If your business plan is "We're starting a online payment processor that will also offer traditional banking services like checking", and you sound like you can actually deliver it, then you'll get your charter. Hell, you might even get some business startup grants cuz that's the sort of new world tech business states are fighting each other for.
With a charter in hand, you open an account with the Federal Reserve (which functions much like any other bank account, you just need a bank charter to do it), and apply for FDIC insurance.
Then you're in business.
Now, there are requirements. You have to maintain certain levels (reserve requirements). But if you're not issuing any loans, just holding all deposits, paying no interest, and paying operating costs on fees... then maintaining reserves and thus solvency is not a problem. You can't be bank-runned if you have all the money in reserves. Now, why someone would WANT to bank with you under such terms is a mystery (to the fed) but it's not illegal.
What I described above is how paypal works anyway (no loans, everything paid for by fees).
Now, to actually do what we're proposing (replace paypal) you're gonna need some heavy hardware and a bunch of bespoke software. That's all separate from the cost of building a bank, and frankly the bigger problem.
But if an entity like subscribestar had established themselves as a bank first BEFORE going live, it would be almost impossible to prevent money from reaching them, at least by check/ach.
The biggest expense is legal.
There is an ungodly amount of paperwork to do in order to establish a bank or credit union. Paying someone else to do it, that's going to run into the hundreds of thousands or low millions.
Your typical short lifespan credit union is generally founded by the village idiot with a law degree, who has pretentions of being a big balls businessman.
The key step is to obtain a State Charter. This sounds hard, it's not. The hurdle is basically "do you have a business plan". If your business plan is "We're starting a online payment processor that will also offer traditional banking services like checking", and you sound like you can actually deliver it, then you'll get your charter. Hell, you might even get some business startup grants cuz that's the sort of new world tech business states are fighting each other for.
With a charter in hand, you open an account with the Federal Reserve (which functions much like any other bank account, you just need a bank charter to do it), and apply for FDIC insurance.
Then you're in business.
Now, there are requirements. You have to maintain certain levels (reserve requirements). But if you're not issuing any loans, just holding all deposits, paying no interest, and paying operating costs on fees... then maintaining reserves and thus solvency is not a problem. You can't be bank-runned if you have all the money in reserves. Now, why someone would WANT to bank with you under such terms is a mystery (to the fed) but it's not illegal.
What I described above is how paypal works anyway (no loans, everything paid for by fees).
Now, to actually do what we're proposing (replace paypal) you're gonna need some heavy hardware and a bunch of bespoke software. That's all separate from the cost of building a bank, and frankly the bigger problem.
But if an entity like subscribestar had established themselves as a bank first BEFORE going live, it would be almost impossible to prevent money from reaching them, at least by check/ach.