The money movement company TabaPay on Friday proposed a purchase of assets from Synapse Financial Technologies, which filed for bankruptcy this week amid a turbulent time in the banking-as-a-service sector.

TabaPay has put forward a purchase price of $9.7 million to acquire the assets of Synapse, according to Lindsay Davis, TabaPay’s head of marketing and strategy.

The deal is pending bankruptcy court approval, Lindsay Davis, TabaPay’s head of marketing and strategy, David told Banking Dive. Synapse’s brokerage, lending and card issuing units will enhance the existing services that TabaPay currently offers its clients, she added.

TabaPay processes over a million transactions daily on behalf of over 2,500 clients in the U.S. and Canada, according to the company.

“Our ability [is] to come in and acquire the assets as well as make some of the creditors whole in this transaction, should it be approved by the bankruptcy court, all of which is, of course, pending for the next 30 days,” Davis said. Synapse has “built sound technology businesses, and we’d like to be able to acquire those to be able to add to our arsenal of payments today,” she said.

Synapse, an embedded finance platform, applied for Chapter 11 bankruptcy on Monday, listing about 50 to 99 creditors and estimating assets at roughly $10 million to $50 million, with worldwide liabilities of about $10 million to $50 million.

Synapse’s creditors include Amazon Web Services, Evolve Bank & Trust, Financial Technology Association, First Horizon Bank, Fiserv, Lineage Bank, Mastercard, Mercury, Trulioo, Yotta and TabaPay, according to bankruptcy court documents.

“We signed a deal with TabaPay and then filed for chap 11 as that was the buyer preference to be able to do this deal free and clear. We would not have done chap 11 otherwise,” Synapse CEO Sankaet Pathak told Banking Dive via LinkedIn messages.

TabaPay was in talks with Synapse for a potential deal for around a year before extending the offer last week, Rodney Robinson, co-founder and CEO of TabaPay, told Fintech Business Weekly.

“The Synapse assets are a great and natural fit to our existing services to grow our offerings in tandem with providing continuity to Synapse clients and banks,” Robinson said in a statement Friday.

Leveraging TabaPay’s platform, Synapse’s customers can benefit from an ecosystem of 15 bank partners, 16 network connections, about 2,500 existing clients and the domain expertise of the combined team, Pathak said in a social media post.

“The Synapse team will maintain its cohesion operationally as part of ensuring there are no immediate changes in operational processes or to your business model,” Pathak wrote. “Our ultimate goal is to seamlessly integrate, operating as a unified financial infrastructure platform and delivering unparalleled products to our collective customer bases.”

TabaPay, for its part, plans to hire Synapse’s staff to maintain operations of the existing business and ensure a smooth transition to the new platform, Davis noted.

“Our talent team is actively assessing that right now,” Davis said. “Those employees, if they choose to…they have a home, but again, they’re at-will employees, and some probably have jumped ship in the past, [when] they already had their own round of layoffs in previous iterations.”

Problems Synapse faced

Synapse laid off 86 people or roughly 40% of its workforce in October. Last June, Pathak said in a blog post that 18% of its staff were culled due to the impact of the “current macroeconomic conditions” over its anticipated growth.

Apart from the economic headwinds, the BaaS startup has faced a $30 million arbitration case from its former partner, Mercury, when the latter decided to offload its intermediary, Synapse, and work directly with Mercury’s banking partner, Evolve Bank & Trust.

In a December blog post, Pathak shared a Mercury court document filing that alleged Synapse was in a “financial freefall,” owing approximately $14 million to other customers, excluding Mercury.

In a post on X this month, formerly Twitter, he has blamed Mercury for interfering with the TabaPay deal. 


Leave a Reply

Your email address will not be published. Required fields are marked *