Compared to Brazil, the US is sluggish in implementing open banking and quick payments. However, FedNow launched in July 2023, and data-sharing legislation is coming, so there is additional opportunity.
The co-founders of Zūm Rails argue that the fragmented payment experiences require enterprises to develop a software stack to provide diverse services. A Montreal-based startup offers an all-in-one payments gateway that combines open banking and rapid payments.
Marc Milewski and Miles Schwartz founded the firm in 2019. Versapay’s early employees included Milewski, a Treasury payments specialist. He developed Canada’s first webhook-enabled EFT gateway there.
“You learn about all the problems everyone has moving money,” Milewski told Eltrys. “Open banking was discussed, but I thought payments were more important. Miles and I discussed creating a new gateway to unify these experiences. Payment specialists are our job; companies don’t want to be.
They began developing software to facilitate money transfers between payment rails so organizations could choose the best option. Payments using “omni rails” include credit, debit, and electronic financial transfers. It offers real-time choices via Visa Direct, Mastercard, MX, and Interac.
Zm Rails handles money flow, reducing fraud and failed transactions by confirming client identification, integrating bank accounts, and enabling payment methods of choice.
Over 500 firms, including Questrade, Coinsquare, and Desjardins, a significant North American credit union federation, use the platform to handle over $1 billion in payments each month. The corporation started in the U.S. in 2023 after growing 200% in the previous year.
After bootstrapping Zūm Rails, Milewski and Schwartz built a staff of 30 individuals. They sought venture money last year.
“We reached the point where we realized that bootstrapping is no longer healthy for our business,” Schwartz told Eltrys. We aim to collaborate on and expand some significant projects. It makes sense to do it all at once, and the firm should go all-in and utilize the fuel.”
After receiving $10.5 million in Series A investment from Arthur Ventures, they want to expand in the U.S. and add merchant banking-as-a-service services. Additionally, Zum Rails is developing FedNow, enabling U.S. companies to make and receive FDIC-insured payments instantly.
According to Eltrys, Jake Olson, VP at Arthur Ventures, acknowledged Zm Rails’ outstanding accomplishment thus far. He dubbed it “a great fit” for its investment thesis of high-growth, capital-efficient B2B software firms.
“Achieving profitability without outside capital is impressive,” Olson added. They also have attractive product positioning. Instead of integrating many systems, Zm Rails offers a unified solution for the full transaction path, ensuring a smooth user experience. Zm Rails is ideal for organizations that value digital financial contact and quick payments as a competitive advantage.
