Neobank PrizePool is reportedly shutting down its consumer app amid an acquisition.
That’s according to a report Sunday (Aug. 25) by Fintech Business Weekly, which says that winding down a startup such as PrizePool can be disruptive to customers who have grown to depend on it for important banking tasks like direct deposits and bill pay.
PrizePool has told customers they have until Sept. 19 to move their funds to an outside bank account, the report said, citing an email sent to users. PYMNTS has contacted PrizePool for comment but has not yet gotten a reply.
The report also points out that the prize-linked banking startup had also worked with the “troubled” Evolve Bank & Trust.
“Thankfully, PrizePool works directly with Evolve and does not appear to have relied on an intermediary platform to support critical tasks like ledgering — though it is unclear if Evolve’s direct partners suffer from the same kinds of reconciliation challenges exposed by the ongoing meltdown of Synapse,” writes Fintech Business Weekly’s Jason Mikula.
As PYMNTS has written, Synapse’s troubles began when its company’s largest client, Mercury, chose to work directly with Evolve, Synapse’s core banking partner, thereby removing the need for Synapse as a middleman.
“That set off a chain of events, few of them good, for Synapse’s other clients who relied on the FinTech provider as their connective tissue,” that report said.
Synapse sought bankruptcy protection and, in April, agreed to be acquired by TabaPay, though that deal soon fell apart, leaving thousands of customers from its FinTech partners locked out of their accounts.
Meanwhile, PYMNTS explored the concept of prize-linked savings accounts in a 2023 conversation with Owen Monagan and Oisin Tiernan, co-founders and CEO and CTO respectively of Layup, a challenger bank offering these accounts for sports fans. Tiernan explained it’s a concept that has been around for some time.
“It exists in Australia, in South Africa. Over a third of the U.K. population has a premium bond account, which is the prize-linked savings mechanism there,” he said.
PLSAs came to America 10 years ago with the passage of the American Savings Promotion Act. The variable rate of return of PLSAs has been shown to help low- to middle-income earners save more money while lowering their spending on lottery tickets and other types of gambling.
“Leveraging digital gamification to reinforce positive behaviors, like saving money or not gambling on sports, can do a lot to accelerate the adoption of new behavioral patterns — including making smarter financial choices,” PYMNTS wrote.
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