First round of funding secured for the launch of Zūm Rails’ revolutionary banking-as-a-service and FedNow solutions

The implementation of open banking and instant payments is progressing slowly in the United States compared to other global markets, such as Brazil. However, with the recent launch of the FedNow program in July of 2023 and the upcoming data-sharing regulations, there is considerable potential on the horizon.

The co-founders of Zūm Rails recognize that consumer experiences with payments are still fragmented, leading companies to develop complex tech stacks in order to offer a wide range of services to their customers. To address this issue, the Montreal-based company has taken a different approach by creating an all-in-one payments gateway that seamlessly integrates open banking and instant payments.

Marc Milewski and Miles Schwartz founded Zūm Rails in 2019. Milewski’s background in treasury payments, along with his previous experience as an early employee at accounts receivable automation software company Versapay, led him to recognize the challenges of moving money across different payment rails. He and Schwartz saw an opportunity to simplify this process and provide a unified experience for companies. As Milewski explains, “Companies shouldn’t have to be payment experts – that’s our job.”

Zūm Rails has developed software that streamlines payment processing by leveraging “omni rails” to offer a variety of payment options, including traditional credit and debit cards, electronic funds transfer, and real-time options through partners like Visa Direct, Mastercard, MX, and Canada’s Interac network. The company also prioritizes security and risk management, utilizing verifications of customer identities, direct bank account connections, and secure payment methods.

Today, Zūm Rails processes over $1 billion in payments each month for more than 500 companies, including well-known names like Questrade, Coinsquare, and Desjardins. With over 200% growth in the past year, the company has also expanded into the U.S., with plans to continue growing and offering new payment solutions.

To support their growth, Milewski and Schwartz decided to raise venture capital, recognizing that bootstrapping their business was no longer sustainable. In their recent Series A funding round, led by Arthur Ventures, Zūm Rails secured $10.5 million. The company plans to use the capital to expand in the U.S., introduce new features for merchants, and launch a FedNow offering for businesses to send and receive FDIC-insured payments within seconds.

“The progress Zūm Rails has made so far is truly impressive,” says Jake Olson, Vice President at Arthur Ventures. “Their product is positioned in a compelling way, offering organizations a comprehensive solution for the entire payment journey and a seamless experience for their end users. This type of streamlined digital financial interaction is a desirable competitive advantage.”

Olson’s sentiments align with Arthur Venture’s investment thesis, emphasizing high-growth and capital-efficient B2B software companies. The company’s ability to achieve profitability without outside capital also adds to its appeal for potential investors. As Schwartz notes, “We have some big initiatives we want to work on and grow on. Now it makes sense to do it all at once, and it’s healthy for the business to now go all-in and use the fuel.”

In the fast-evolving world of payments, Zūm Rails is poised to continue providing innovative solutions and facilitating seamless transactions for companies and their customers alike.