FBO account
A bank account a company holds for the benefit of its customers, pooling their funds while its own ledger tracks what each customer owns.
What an FBO account is
An FBO (for benefit of) account is a custodial bank account that a company opens to hold money belonging to its customers. The account title shows it is held for their benefit. Fintechs, marketplaces and payroll providers use them, keeping a record of each customer's balance, usually in subledgers.
How it works
Money moves in and out of one pooled account at the sponsor bank, but every dollar belongs to a specific customer. The company's ledger and the bank's records must agree, so each customer's share can be identified at any time.
- 01 · OPEN The company opens an account titled for the benefit of its customers.
- 02 · RECORD Each deposit, payment and withdrawal is recorded to the right customer.
- 03 · RECONCILE Ledger totals are matched to the bank balance, usually every day.
When businesses use it
- Marketplaces that hold seller proceeds until payout
- Payroll and payout platforms that move funds on behalf of employers
- Fintech apps and wallets that hold customer balances at a bank
- Prepaid card programs that hold cardholder funds
Cross River offers custodial and purpose-built account programs through its accounts API, with unlimited subledgers to track each end customer's funds and multi-rail money movement. See accounts at Cross River.