TabaPay Inc. has moved into the formal Federal Reserve review process for its proposed acquisition of Transact Bank, National Association, a step that would transform the payments infrastructure company into the parent of a federally chartered bank and subject the combined organization to the regulatory framework governing U.S. bank holding companies.

A notice published in the Federal Register on September 14 states that TabaPay, based in Palo Alto, California, has applied to the Federal Reserve Board to become a bank holding company by acquiring Transact Bank, National Association, of Denver, Colorado. The filing falls under the Bank Holding Company Act of 1956 and Regulation Y, which govern acquisitions of banks and the permissible activities of companies that control them. Interested parties have until October 14 to submit comments to the Federal Reserve Bank of San Francisco or the Board of Governors.

The notice provides the clearest regulatory confirmation to date that TabaPay’s bank acquisition is advancing from an announced transaction into the federal approval process. TabaPay disclosed its intention to buy Transact Bank on September 2, when it also announced $155 million in strategic growth financing led by FTV Capital. The financing includes both primary capital and a secondary transaction, according to the investor announcement, and is intended to support TabaPay’s broader expansion as well as its planned banking operation.

The acquisition represents a significant structural change for TabaPay. The company has historically operated as a money-movement platform serving fintech companies, lenders and other digital financial-services businesses, connecting clients to card and bank payment rails through a single technology interface. Bank ownership would place a federally chartered institution within that ecosystem, giving TabaPay greater direct control over functions that payments companies frequently obtain from sponsor banks.

Under the Federal Reserve filing, the proposed structure extends beyond the acquisition itself. TabaPay is also seeking authority to engage de novo in data-processing activities through a proposed new wholly owned subsidiary under Section 225.28(b)(14) of Regulation Y. In addition, the filing covers money-transmission activities conducted through TabaPay Payment Services LLC under Section 4(c)(8) of the Bank Holding Company Act. Those provisions matter because a bank holding company’s nonbank activities generally must fall within categories considered closely related to banking or otherwise permissible under federal law.

The regulatory distinction is important. Transact Bank is already an active national bank whose primary federal regulator is the Office of the Comptroller of the Currency, according to the Federal Financial Institutions Examination Council’s National Information Center. It is also insured through the Federal Deposit Insurance Fund. If the transaction is approved, the bank would remain subject to bank-level supervision while TabaPay, as the controlling parent, would come under Federal Reserve oversight as a bank holding company.

That holding-company structure can carry substantially broader supervisory implications than a conventional commercial relationship between a fintech and a sponsor bank. Federal Reserve supervision can examine the parent organization’s capital, liquidity, governance, risk management, intercompany relationships and activities that could affect the safety and soundness of the insured bank. For TabaPay, the application therefore represents not merely an acquisition approval but entry into a more comprehensive prudential regulatory perimeter.

TabaPay has presented the transaction as a way to reduce complexity in the increasingly fragmented infrastructure supporting fintech payments. The company said many fintechs and platform businesses depend on multiple sponsor banks to cover different products, payment rails and risk profiles. Owning a bank would give TabaPay an additional regulated platform of its own while still allowing it to maintain relationships with outside institutions.

The company has said that, once fully operational, the acquired bank would support major U.S. money-movement channels including the RTP network, FedNow, ACH transfers and wire payments, as well as card sponsorship across Visa, Mastercard, Discover and regional networks. TabaPay also expects the bank to support use cases such as digital banking and debt repayment that can be difficult for technology companies to manage when banking services are spread across several sponsor institutions.

For payment companies, direct bank ownership can change both economics and operational control. Sponsor-bank models allow fintech businesses to enter markets without owning regulated depository institutions, but they also create dependencies. A sponsor bank may determine which customer categories are acceptable, impose transaction controls, require compliance changes or terminate programs when its own risk tolerance changes. Multiple bank relationships can improve redundancy, but they also create additional integration, oversight and reconciliation requirements.

TabaPay’s strategy appears designed to add an owned banking option without eliminating that external redundancy. Chief Executive Rodney Robinson said when the transaction was announced that the planned bank would bring payments and banking capabilities under one roof while TabaPay continued working with its network of bank partners. The company has said it works with more than 20 partner banks in the United States and Canada.

The scale of TabaPay’s processing business makes the regulatory transition noteworthy. The company says it is on track to process more than $100 billion in payment volume during 2026, ranks as the fifth-largest U.S. card-not-present processor by transaction count and reaches about one-third of American households through the businesses it serves. Those figures are company-reported and illustrate that the strategic importance of Transact Bank lies less in the acquired institution’s existing banking footprint than in the charter and regulated capabilities that could be integrated with TabaPay’s payments platform.

Transact Bank itself is a specialized institution. Federal banking records identify it as an active national bank headquartered at 700 17th Street in Denver, with commercial banking as its primary activity, OCC supervision and FDIC insurance. The bank carries Federal Reserve RSSD identification number 403254 and FDIC certificate number 13986.

TabaPay has said the institution would be renamed TabaBank, N.A. following completion of the transaction. The company’s September announcement described the bank as a platform for expanding card-network sponsorship and merchant-acquiring capabilities and said the financing would help position the bank to serve as an acquirer across major card networks. That could expand TabaPay’s ability to support merchants, independent sales organizations, payment facilitators and technology platforms that require regulated access to payment systems.

The proposed model reflects a broader strategic question across financial technology: whether scaled payment companies should continue relying almost entirely on partner banks or seek direct ownership of regulated banking infrastructure. Bank acquisitions can provide more control over product development, settlement and compliance architecture, but they also create continuing obligations around capital, governance, examinations, regulatory reporting and risk management that do not apply in the same way to nonbank payment processors.

For TabaPay, those trade-offs will now be evaluated through the Federal Reserve’s review under the Bank Holding Company Act. The Federal Register notice states that regulators will consider the statutory standards governing bank acquisitions. Those standards generally include financial and managerial resources, competitive effects, community considerations and other factors relevant to the proposed banking organization. Where nonbanking activities are part of the proposal, the review also considers their consistency with the permissible-activity framework under Section 4 of the Act.

The public-comment process creates a formal opportunity for interested parties to raise issues related to the transaction. The Federal Reserve notice says public portions of the applications and related filings are available for inspection through the relevant Reserve Bank and the Board, and comments submitted in response to the notice generally become publicly available. The deadline for comments on TabaPay’s application is October 14, one month after publication of the notice.

Regulatory approval from the Federal Reserve is not the only consideration because Transact Bank is a nationally chartered institution supervised by the OCC. Banking Dive reported when the transaction was announced that the acquisition requires Federal Reserve approval, while the national bank charter places the institution within the OCC framework. The company has characterized completion as subject to customary regulatory approvals.

TabaPay said in early September that it expected the deal to close during the fourth quarter of 2026. That timetable remains contingent on regulatory review and closing conditions. The Federal Register notice itself does not indicate that the Federal Reserve has reached a decision; it confirms that the application is under consideration and establishes the public-comment period.

The accompanying $155 million FTV Capital financing gives TabaPay additional resources as it moves toward the proposed banking structure. FTV said the transaction includes primary capital that can support expansion as well as a secondary component. TabaPay has also said the investment will help accelerate its product roadmap, including merchant liquidity products and potential strategic acquisitions. Robert Anderson, a partner at FTV Capital, joined TabaPay’s board in connection with the investment.

The financing should not be confused with the purchase price of Transact Bank. Public materials describing the $155 million transaction characterize it as strategic growth financing for TabaPay rather than solely as consideration paid to acquire the bank. The Federal Register notice does not disclose acquisition pricing or other detailed financial terms for the bank purchase.

The Federal Reserve filing also places TabaPay’s existing money-transmission business within the proposed holding-company framework. That point is significant because payments companies often operate under a combination of state money-transmitter licensing, bank partnerships and network agreements. Once a company controls a bank, regulators must evaluate how those nonbank operations fit alongside the insured depository institution and whether activities conducted elsewhere in the corporate group remain permissible.

For institutional investors and competitors, the transaction will be closely watched as a test of whether a scaled payments infrastructure provider can successfully combine a partner-bank network with direct bank ownership. If approved, TabaPay would gain an internal regulated institution capable of supporting payment sponsorship and settlement functions while preserving external relationships that provide capacity and diversification.

The immediate milestone is the October 14 close of the Federal Reserve comment period. After that, the application remains subject to regulatory analysis and any additional information requests before a final decision. Until approval and closing occur, Transact Bank remains separately owned and regulated, and TabaPay remains a nonbank payments company pursuing — rather than possessing — bank holding company status.