The adoption of open banking and instant payments has been slower in the United States than in other markets around the world (such as Brazil). That said, with the new program FedNow going live in July 2023 and data sharing regulations on the horizon, more possibilities are on the horizon.
In the meantime, the Züm Rails co-founders say the consumer payments experience will continue to be fragmented and businesses will need to build out their technology stacks to offer a wide range of services to their customers. ing. The Montreal-based company's approach is to provide an all-in-one payment gateway that combines open banking and instant payments.
Marc Milewski and Miles Schwartz founded the company in 2019. Milewski's background is in Treasury payments and was an early employee at Versapay, an accounts receivable automation software company. While there, he worked on the development of what would eventually become his webhook-enabled EFT gateway, Canada's first.
“I learned about all the problems that everyone has when moving money,” Milewski told TechCrunch. “There was talk about open banking, but I thought it was more about payments. Miles and I talked about building a whole new gateway that would unify these experiences. We don’t want to be experts; that’s what we do.”
They started building software that simplified the complexity of moving funds through different payment rails so that companies could use the approach that was right for their business. The company's technology leverages “omni-rails” for payments, whether through traditional credit, debit, or electronic funds transfer options. It also offers real-time options through partners such as Visa Direct, Mastercard, MX and his Interac network in Canada.
Züm Rails manages the flow of money, reducing fraud and failed transactions by verifying customer identity, linking directly to bank accounts, and facilitating payments in the method of the customer's choice.
The company currently processes more than $1 billion in payments each month through its platform for more than 500 companies, including QuestTrade, Coinsquare, and Desjardins, a large North American credit union federation. The company has grown over 200% over the past year and is set to launch in the US at the end of 2023.
Milewski and Schwartz started Züm Rails themselves and grew it to a team of 30 people. Last year, the two decided to raise venture capital.
“We reached a point where we realized that bootstrapping was no longer healthy for our business,” Schwartz told TechCrunch. “We have some big initiatives that we want to work on and grow. Now it makes sense to do it all at once, and it's healthy for the business to go all out and burn fuel right now.” .”
Züm Rails' technology leverages “omni-rails” for payments, whether through traditional credit, debit, or electronic funds transfer options. Image credits: Zumrail
Company closes $10.5 million Series A funding round led by Arthur Ventures to invest in U.S. growth and expansion of payment services, including introduction of new Banking-as-a-Service capabilities for merchants I plan to. Additionally, ZümRails is working on his FedNow service in the US that will allow businesses to send and receive his FDIC-insured payments within seconds.
Jake Olson, vice president at Arthur Ventures, told TechCrunch. He said the company is a “perfect fit” for the company's investment thesis of a high-growth, capital-efficient B2B software company.
“It's great that we achieved profitability without using any external capital,” Olson said. “Their product positioning is also very attractive. Rather than cobble together disparate systems, Züm Rails provides organizations with a comprehensive solution that can power the entire transaction process and provide a seamless experience for end users. Organizations that see streamlined digital financial transactions and instant payment capabilities as a competitive advantage are a great fit for Züm Rails.”