In a recent development, payment processor TabaPay has announced its agreement to acquire the operating assets of Synapse Financial Technologies, a troubled banking-as-service fintech company. This decision comes after Synapse’s filing for Chapter 11 bankruptcy, with the deal awaiting approval from the bankruptcy court. The acquisition would involve transferring San Francisco-based Synapse’s platforms for lending, brokerage, and credit and debit card issuing to Mountain View-based TabaPay.
Rodney Robinson, CEO of TabaPay, expressed his belief that Synapse’s services align well with those already offered by his company. He mentioned plans to hire a significant number of Synapse’s 100 employees and disclosed that Synapse CEO Sankaet Pathak will join TabaPay in an undisclosed role. While Robinson did not reveal the acquisition price, it is expected to be disclosed in bankruptcy court filings.
In a post on Medium, Pathak praised the deal for providing continuity and better support to Synapse’s customers without explicitly mentioning the bankruptcy filing. Pathak founded Synapse in 2014 with a focus on digital banking and later transitioned to assisting other fintech companies in partnering with traditional banks. Despite raising $51 million in venture capital, reports emerged in early 2020 suggesting management issues jeopardized Synapse’s future. More recently, the company faced challenges with its banking partner, Evolve Bank & Trust, resulting in the discovery of missing funds in October.
TabaPay, known for its rapid growth and inclusion in the Forbes Fintech 50 list, reported $36 million in net revenue for 2023, up from $26 million the previous year. The company aims to expand its services to become a comprehensive solution for its fintech clients, which include prominent names like Chime, DailyPay, and Upgrade. With Synapse Credit holding lending licenses in 44 U.S. states and Synapse Brokerage registered with FINRA and SIPC, TabaPay plans to leverage this expertise to offer bank-like services to existing and new customers.
The acquisition of Synapse presents TabaPay with the opportunity to capitalize on the demand for alternative lending solutions in light of increased regulatory scrutiny. By utilizing Synapse’s licenses and technology, TabaPay intends to offer products such as buy-now, pay-later options and secured credit cards directly to its customer base. This strategic move aligns with the company’s goal of maintaining accelerated growth and expanding its suite of fintech offerings. Robinson emphasized the potential for TabaPay to fill the gap left by regulatory actions affecting lending platforms used by fintech companies.
As the fintech industry continues to evolve and face regulatory challenges, TabaPay’s acquisition of Synapse signals a strategic shift towards offering a wider array of services to meet the changing needs of its clients. With a focus on innovation and compliance, TabaPay aims to position itself as a comprehensive solution for fintech companies seeking reliable and compliant financial services. This deal represents a significant step in TabaPay’s growth strategy and underscores the importance of adapting to industry trends to remain competitive in the evolving financial landscape.
