TabaPay to acquire Transact Bank after $155m

Money movement platform TabaPay has secured $155 million in strategic growth financing and agreed to acquire Transact Bank. The firm has agreed to acquire Transact Bank, an OCC-chartered and FDIC-insured institution based in Denver, which will be renamed TabaBank.

The strategic growth financing was led by FTV Capital. According to the company, the $155 million investment includes both primary capital for TabaPay and a secondary transaction. The deal to buy the bank is expected to close in the fourth quarter, pending regulatory approval.

TabaPay provides money movement infrastructure via a single API, enabling instant payments and payouts across card and bank rails for fintechs and lenders. The company reports it has a network of over 20 partner banks across the US and Canada and is on track to process more than $100 billion in payment volume this year.

Rationale for the bank acquisition

TabaPay states that evolving regulatory requirements are forcing fintechs and platform businesses to rely on multiple sponsor banks to support various use cases. This adds complexity and limits operational redundancy. The planned launch of TabaBank is designed to address these specific challenges.

Once operational, the bank will complement TabaPay's existing partner bank network. It is intended to provide additional redundancy and specialized expertise for more challenging use cases. These cases include digital banking services and debt repayment programs.

Enhanced banking and sponsorship capabilities

The $155 million investment is expected to qualify the newly formed TabaBank to serve as an acquirer for all industries across all major card networks. This will bolster its sponsorship capabilities for a wide range of clients.

The enhanced capabilities are aimed at merchants, independent sales organizations (ISOs), payment facilitators, and other platform customers. By combining payments and banking, TabaPay aims to create a more integrated service offering.

Rodney Robinson, CEO of TabaPay, commented on the strategy. "The planned launch of TabaBank will bring payments and banking capabilities under one roof, offering our clients a more integrated experience while continuing to work alongside our network of bank partners," he said.

Previous acquisition attempt

TabaPay's acquisition of Transact Bank is not its first attempt at a significant acquisition in 2024. Earlier this year, the company agreed to purchase the assets of the bankrupt Banking-as-a-Service platform Synapse. However, TabaPay ultimately pulled out of that deal after certain closing conditions were not met.

The move to acquire a bank directly marks a strategic shift towards owning a regulated banking institution to solidify its infrastructure.