Zūm Rails raises $10.5m to expand open banking in the US

By Delisha Fernandes

Zūm Rails, a payments gateway company that merges open banking with instant payments, has raised a $10.5 million Series A funding round.

The round was led by Arthur Ventures, a Minneapolis-based growth equity firm that specializes in B2B software.

“Companies that want to move money instantly need to adjust for risk, and open banking is the greatest gift to payments in this regard,” said Marc Milewski, co-founder and CEO, Zūm Rails. “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. With Arthur Ventures’ investment, we’re positioned for further expansion of our solution through the addition of Banking-as-a-Service and other new capabilities.”

Zūm Rails integrates open banking and instant payments into a single gateway that powers the entire transaction journey. This includes everything from verifying a customer’s identity to linking directly with their bank account to reduce fraud and failed transactions to facilitating payments via the method of the customer’s choosing. Zūm Rails’ ‘omni-rail’ approach to payments includes both traditional credit, debit and electronic funds transfer (EFT) options, as well as real-time options through partners such as Visa Direct, Mastercard, MX and Canada’s Interac network.

In addition to scaling its U.S. growth, Zūm Rails will use the funding to expand further its payments offerings, including the introduction of new Banking-as-a-Service features for merchants. The company is additionally working on a forthcoming FedNow offering in the U.S. that will enable businesses to send and receive FDIC-insured payments within seconds.

“Payments are the lifeblood of every business, but too often, keeping up with the ever-evolving array of services needed to process payments quickly, efficiently and securely stands in the way of success,” said Jake Olson, Vice President, Arthur Ventures. “Zūm Rails’ explosive growth is validation of its ability to solve this problem. Having already transformed the Canadian payments landscape, the company is well-positioned to increase this growth with the investments it’s making in its product and scaling its presence across all of North America.”