Payment processor TabaPay has announced its agreement to acquire the operating assets of fintech company Synapse Financial Technologies, which has filed for Chapter 11 bankruptcy. The sale of Synapse’s lending, brokerage, and credit and debit card issuing platforms to TabaPay must be approved by the bankruptcy court. TabaPay CEO Rodney Robinson sees Synapse’s services as a natural fit with his company’s offerings and plans to hire many of Synapse’s current employees. Synapse CEO Sankaet Pathak will also join TabaPay in a role to be announced.
Pathak praised the deal in a Medium post for providing continuity and better support for Synapse’s customers, without mentioning the bankruptcy filing. Synapse, founded in 2014, originally focused on digital banking before transitioning into helping other fintechs partner with traditional banks. The company raised $51 million from venture capital investors, but management problems and financial issues began to threaten its future. A strained relationship with banking partner Evolve Bank & Trust resulted in millions of dollars missing from client accounts, prompting the need to find a new banking partner by December 31, 2023.
TabaPay, a member of the Forbes Fintech 50, has seen significant revenue growth and aims to become a one-stop shop for fintech clients, including major players like Chime, DailyPay, and Upgrade. With Synapse’s lending licenses in 44 states and brokerage registration, TabaPay plans to offer bank-like services directly to customers, rather than acting as an intermediary to banks as Synapse did. This move will allow fintechs to launch new products such as buy-now, pay-later offerings or secured credit cards through TabaPay, expanding the available options for customers.
Regulators have increased scrutiny on lending platforms popular among fintechs in recent years, leading to the need for increased oversight and compliance with regulations. The Synapse deal gives TabaPay the opportunity to meet the demand from fintechs facing regulatory challenges and limited options for financial services. TabaPay’s growth trajectory is bolstered by the acquisition of Synapse’s assets, which will enable the company to offer additional products and services to its existing customer base. The deal marks a significant move in the fintech industry as companies seek to adapt to evolving regulatory landscapes and provide innovative solutions to their clients.
