Partnerships between organizations end all the time. Sometimes it’s amicable, and sometimes it’s complicated. In the instance of Synapse and Evolve, it was complicated.

Synapse operates a platform enabling banks and fintech companies to easily develop financial services. It was providing those types of services as an intermediary between banking partner Evolve Bank & Trust and business banking startup Mercury.

When Evolve and Mercury decided to end their respective relationships with Synapse and work directly with each other, each entity had concerns that they were working through, according to the companies. Private conversations between Evolve and Synapse became public knowledge in a lengthy Fintech Business Weekly post from Oct. 8 that claimed the companies were at odds with each as the relationship was winding down.

Included in the allegations laid out in the post, Jason Mikula reported that the entities are blaming each other “over who was responsible for a “deficit” of over $13 million in “for benefit of” accounts holding customer funds at Evolve, among myriad other issues” going back at least three years. Neither company addressed this or commented on this allegation when asked directly.

Mikula’s post also focused on, among other things, a letter that Synapse reportedly sent to Evolve on September 27 alleging that Evolve made an error that resulted in “inappropriate debits from customer funds.”

What Synapse says

Sankaet Pathak, founder and CEO of banking-as-a-service platform Synapse, wrote in a Medium post Friday that this communication between Synapse and its banking partner (Evolve is not mentioned by name) reported on was “intended to be a candid exchange of thoughts” and “never meant for public eyes.”

Pathak wrote that the letter was actually meant to “provide a clear articulation of our stance on certain matters” and find resolutions related to ongoing discussions Synapse was having with its banking partner.

He highlighted four items within that communication, including bank charges Pathak wrote “should not have occurred,” instances of underpayments, rebate revenue withholding and challenges Synapse was having with the reconciliation process.

With regard to the revenue withholding in particular, Pathak wrote that “we firmly believe that this issue has not only impacted our partnership but has also had adverse effects on our valued fintech customers.”

For the reconciliations, Pathak wrote that Synapse was asking for “increased attention and resources.” The company did not directly respond to requests for comment.

Meanwhile, this is all coming as Synapse confirmed on October 6 that it made another round of layoffs, this time impacting 40% of its staff.

What Evolve says

In August 2022, Evolve had informed Synapse of its intentions to terminate the relationship, according to a person familiar with the matter, who was granted anonymity. The reason? Evolve wanted to work directly with Mercury rather than using Synapse as an intermediary, according to the source.

A letter, obtained and reviewed by TechCrunch, stated that notice of change to the relationship would end in September 2023 and steps to take to wind it down over the course of the year.

In a statement to TechCrunch, an Evolve spokesperson confirmed the bank’s “strategy to move toward prioritizing direct fintech relationships, rather than relationships through third-party intermediaries.”

The institution did not address the alleged deficit noted in Mikula’s report, but rather focused on that it believed Synapse was given a proper amount of time to transition customers to a new banking partner.

“Any suggestion, in media reports or otherwise, that these intermediary clients did not have sufficient time to prepare for a transition of customer accounts is inaccurate,” according to the company.

Addressing the status of its relationship with Synapse, Evolve’s spokesperson wrote that there are “several inaccuracies in the media coverage,” including about the reconciliation process, which the company said it could not discuss due to “confidentiality obligations.”

What Mercury says

Mercury published its own post on X, dated October 9, in which the startup confirmed that it no longer was working with Synapse following the reconciliation of customer funds it had with Evolve. “Importantly, no customer funds ever moved during this transition and all account numbers and routing numbers remain the same, although some customers received new debit cards,” the company wrote.

What’s next

Meanwhile, Pathak’s Medium post said that Synapse intends to “actively and productively collaborate with our partner to resolve all the issues mentioned in the (September 27) letter.” Similarly, Evolve said its responsibility is to the end user depositor to protect their funds, adding, “we work closely and diligently with fintech platforms, who are required to perform reconciliations on a daily basis, and we proactively ensure that platforms have the right data and tools to assist with that process.”