CareCredit - Women's Health April 2024

Zūm Rails Raises $7 Million to Expand Open Banking Offering


Zūm Rails has raised $7.7 million to expand its open banking/instant payments solution.

The Montreal-based company announced the $7.7 million ($10.5 million CAD) Series A funding round Thursday (Feb. 22), saying it would use the funding to scale its growth in the U.S. and expand its payment offerings, including new Banking-as-a-Service features for merchants and a forthcoming FedNow offering in the U.S. that will let businesses send and receive FDIC-insured payments within seconds.

“Companies that want to move money instantly need to adjust for risk, and open banking is the greatest gift to payments in this regard,” Marc Milewski, co-founder and CEO, Zūm Rails, said in a news release.

“We’ve brought open banking and instant payments together in an omni-rail solution that enables companies to check off all of their payments needs from a single gateway.”

Founded in 2019, Zūm Rails integrates open banking and instant payments into one gateway that handles services such as verifying customers’ identities, linking directly with their bank account to reduce fraud and failed transactions, and facilitating payments via customers’ preferred methods.

The company says its processes more than $1 billion in payments through its platform each month for clients that include Questrade, Coinsquare and Desjardins, the largest federation of credit unions in North America.

The funding round is happening at a time when consumers are showing an increasing appetite for instant payments, according to data from both the Federal Reserve and PYMNTS.

Claire Greene, payments risk expert with the Federal Reserve Bank of Atlanta, discussed this topic in a recent blog post, writing that consumers are embracing faster payment whenever possible, including in the cryptocurrency sector, where 20% of users said the ability to “send money faster” was the chief reason they adopted digital currencies.

Another bit of evidence: a 27% bump in same-day ACH payments last year, along with a steep decline in the use of checks and money orders.

“Even households without bank accounts moved away from paper ways to presumably faster digital methods,” wrote Greene.

Meanwhile, research by PYMNTS shows that when given the opportunity to receive instant payments, 72% of respondents say “yes.”

“We note these preferences aren’t limited to wages. In addition to earnings, the study considered other income streams including Social Security payments, tax refunds, insurance claim payouts, freelance revenue, loan disbursements and others,” PYMNTS wrote. “Six out of 10 U.S. consumers receive some form of corporate and government payments, which, on average, amounts to $34,000 annually.”