Teen fintech Copper had to urgently discontinue its banking and debit products

Another fintech startup, along with its customers, was severely impacted by the implosion of Synapse, a banking-as-a-service startup.

Copper Banking, a digital banking service aimed at teens, informed its customers on May 12 that it would eliminate bank deposit accounts and debit cards on May 13. In a letter to customers, CEO and co-founder Eddie Behringer said the company had learned the previous week the banking middleware provider they used, Synapse, was terminating its service “imminently.”

“Despite our advance planning, this event forced us to close our bank accounts much earlier than planned,” he wrote.

Synapse filed for Chapter 11 reorganization bankruptcy on April 22 and plans to sell its assets to TabaPay for $9.7 million. But that sale fell through, and last week a U.S. trustee filed an emergency motion asking the judge to convert the bankruptcy to a Chapter 7 liquidation.

The removal of Copper Banking bank accounts and debit cards means that some Copper customers do not have access to their funds. Behringer says it is working with its banking partners, AMG National Trust Bank and Synapse, to get their money back as quickly as possible.

Behringer said that as soon as it learned the TabaPay deal was in jeopardy, it began returning customer funds, so only a small, single-digit number of its customers did not receive their funds before the service closes.

Copper now plans to offer a white-label family banking product later this year in partnership with “major banks across America,” which Behringer told TechCrunch in an interview he could not yet name . The company had been considering moving in that direction for the past year, he added, but the process was accelerated due to the demise of Synapse.

According to Behringer, Copper remains operational and offers its direct-to-consumer financial education product, Earn, to customers. Earn credits for teens to play games, take surveys, scan receipts, refer friends and once users reach a certain threshold of credits, they get paid in cash (500 credits for $5), he indicates. The goal is to teach children about finance. He makes money from this by partnering with other institutions.

This product, he said, was launched just under a year ago and has seen 160% year-over-year revenue growth. It has since provided the “majority” of Copper’s revenue, as the company makes money through partnerships with brands who want feedback on their products. The 30-person company remains intact, Behringer said, and is still hiring.

He claims that due to Earn’s strong growth, Copper is still “on track to achieve near profitability this year” and, in addition to the cash raised from its venture capital fundraising, has ” well over four years of track time.”

In April 2022, Copper raised $29 million in a Series A funding round led by Fiat Ventures. It has raised a total of $42.3 million since its founding in 2019. Other backers include Panoramic Ventures, Insight Partners and Invesco Private Capital. At the time, the company said it primarily derived its revenue from interchange fees.

AMG National Trust Bank and Synapse could not be reached for comment at the time of publication. Apparently, Copper customers may not be alone. At an emergency hearing last week, as Forbes reported, a U.S. bankruptcy court judge described Synapse’s problems as “a situation in which tens of millions of people do not have access to potentially hundreds of millions of dollars from their deposits.”

And Fintech Business Weekly’s Jason Mikula reported after Friday’s bankruptcy hearing: “Many fintech end users whose ability to access their funds were frozen shared the devastating impact it had on their lives with the court and the hundreds of participants connected to the hearing.”

The copper problems could be another example of the trend of mainstream fintechs moving towards B2B. Earlier this year, TechCrunch reported that Miami-based Onyx Private, a Y Combinator-backed digital bank that provided banking and investment services to high-income Millennials and Gen Z, had also ended its operations. consumer banking operations. The company said at the time that it would move to a “white-label B2B platform-as-a-service model for community banks, regional banks and credit unions” that want to launch digital applications designed for young, affluent consumers.

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