The short version
- A fintech that is not itself a bank usually keeps your money at partner banks or in safeguarded accounts. That is not the same as holding it at a bank yourself.
- In the US, FDIC insurance covers the failure of an insured bank, up to $250,000 per depositor, per bank, per ownership category. It does not cover the failure of a non-bank in the middle.
- In the UK, money held by an e-money firm is safeguarded but not covered by the FSCS, which protects bank deposits up to £120,000 from 1 December 2025.
Heads-up: some links on this page may be affiliate links. If you sign up through one, we may earn a commission at no extra cost to you. Tools are listed alphabetically; paid placements are always labelled "Featured". How we make money.
Open a business account at a fintech and the app looks just like a bank. Often it is not one. The company you deal with may be a technology firm that holds your money at partner banks, or an e-money institution that keeps it in safeguarded accounts. Both can be safe, but the protection works differently from a deposit at a bank, and the difference matters if something goes wrong.
Three ways a finance app can hold your money
| Model | Who holds the money | Main protection | Examples in the directory |
|---|---|---|---|
| Licensed bank | The bank itself | Deposit guarantee scheme (FDIC in the US, FSCS in the UK, national schemes in the EU) | Starling Business, Monzo Business, N26 Business |
| Fintech with partner banks | One or more partner banks | Deposit insurance at the partner bank, often "pass-through" to you | Mercury, Relay |
| E-money or payment institution | Safeguarded accounts and assets, kept apart from the firm's own money | Safeguarding rules, not a deposit guarantee | Wise Business |
Many fintechs say on their own site which model applies. Look for phrases like "banking services provided by", "partner bank", "e-money" or "safeguarded" in the footer or terms.
US: what FDIC pass-through insurance covers
The FDIC insures deposits "to at least $250,000 per depositor, per ownership category at each FDIC-insured bank". When a fintech holds your money at a partner bank, coverage can "pass through" to you, but only if certain record-keeping conditions are met.
Some fintechs spread balances across many banks through a sweep network to raise the insured amount. Mercury, for example, says it is "a fintech company, not an FDIC-insured bank", that deposits are held at its partner banks, and that through sweep networks deposits "become eligible for up to $5M in FDIC Insurance".
The key limit: FDIC insurance covers the failure of an insured bank. The FDIC states that it does not cover "default or bankruptcy of any non-FDIC-insured institution". If the fintech or a middleman fails and its records are wrong, deposit insurance may not help.
What the Synapse collapse showed
Synapse was a middleman that connected fintech apps such as Yotta and Juno, which were not banks, to partner banks such as Evolve. After a dispute with Evolve over customer balances in 2024, Synapse went bankrupt, and customers found their money frozen.
A court-appointed trustee found that up to $96 million in customer funds was missing, NBC News reported. Customers had been told their deposits were FDIC-insured, but the FDIC said its insurance fund does not cover the failure of non-banks like Synapse. At Yotta, 13,725 customers were reportedly being offered a combined $11.8 million against $64.9 million in deposits.
The lesson is not that every fintech is risky. It is that "FDIC-insured" on a fintech's website means insured against the partner bank failing, not against everything that can go wrong in between.
UK and EU: safeguarding instead of deposit insurance
In the UK, the Financial Services Compensation Scheme protects deposits at banks, building societies and credit unions. The limit rose from £85,000 to £120,000 per person, per institution, on 1 December 2025.
E-money and payment firms are different. Wise's UK entity says its e-money and payment services "are not subject to the Financial Services Compensation Scheme". Instead, it safeguards customer money: it keeps it separate from the money it uses to run the business, in a mix of bank accounts and liquid assets, mainly government bonds. If such a firm fails, safeguarded money is meant to be returned to customers, but the process can take time.
The EU works similarly: deposits at a licensed bank are covered by the national deposit guarantee scheme, while e-money institutions safeguard funds instead.
Checklist before you move your balance
- Find out whether the provider is a bank, a fintech with partner banks, or an e-money institution. Check the footer and the terms.
- If it uses partner banks, note which ones, and whether your balance is spread across several banks.
- Check the limit that applies to you and keep large balances within it, or spread them across providers.
- Look the firm up on your regulator's public register, such as the FCA register in the UK.
- Keep enough money for payroll and taxes somewhere you could reach within days if one account were frozen.
- Remember that investments, crypto and money market funds are not deposits and are not covered by deposit insurance.
Comparing accounts? See Mercury vs Relay, Wise Business vs Revolut Business and Starling Business vs Monzo Business, or all business banking options. If you send money abroad from these accounts, read how to find the real cost of a transfer.
Tools in this guide
Best for US startups and tech companies.
Best for businesses paying or getting paid internationally.
Best for UK small businesses that want a full bank.
Best for UK sole traders who already like Monzo.
Best for European freelancers and sole traders.
Best for US small businesses that budget with multiple accounts.
Best for businesses that trade in several currencies.
Frequently asked questions
Is Mercury a bank?
No. Mercury describes itself as a fintech company, not an FDIC-insured bank. Deposits are held at its partner banks, which are FDIC members, and through sweep networks can be eligible for up to $5M in FDIC insurance, subject to conditions for pass-through coverage.
Is money in Wise protected by the FSCS?
Not for its e-money and payment services. Wise's UK entity says those services are not covered by the FSCS; instead, customer money is safeguarded, kept separate from Wise's own money in banks and liquid assets such as government bonds.
Does FDIC insurance cover crypto or stocks?
No. The FDIC lists crypto assets, stock investments, bonds and mutual funds as not covered, even when bought through an FDIC-insured bank.
Sources
- FDIC, Understanding deposit insurance
- Mercury Help Center, Understanding FDIC insurance
- Wise, How our UK entity Wise Payments Ltd safeguards customer funds
- Bank of England, PRA confirms FSCS deposit limit to be increased to £120,000 from 1 December (2025)
- NBC News, Thousands of Americans see their savings vanish in Synapse fintech crisis
Published 25 October 2026, last checked 25 October 2026. Rules, prices and availability change; confirm with the provider or an adviser before you act. NxtGenFin is an independent directory, not affiliated with the companies named unless marked as featured, sponsored or affiliate link. Not financial, tax or legal advice.