Meet the FinTech Company Enabling Businesses to Move Before the Market to Power Faster, Smoother Transactions With Open Banking, Instant Payments and More

Meet the Fintech Company Enabling Businesses to Move Before the Market to Power Faster, Smoother Transactions With Open Banking, Instant Payments and More

When Marc Milewski and Miles Schwartz co-founded Zum Rails in 2019, open banking and instant payments were still in their infancy in North America.

Fintech companies were only just beginning to demonstrate the potential of these capabilities with early previews of how data aggregation, identity verification and risk management could facilitate faster, smoother and safer transactions. Regulators, on the other hand, had not started exploring the standardization of open banking and instant payments at all.

The ability to leverage open banking-powered data sharing to mitigate fraud and risk in instant payments—which goes up considerably the faster money moves between parties—promised to open up a whole new world for businesses. But Zum Rails didn’t want to wait for these capabilities to gain mainstream traction before bringing them together.

Coincidentally, neither did some of the company’s early clients like Questrade, Fairstone and Desjardins.

Milewski and Schwartz set out to build a platform that wouldn’t just broaden access to instant payment and open banking capabilities—and future ones they hadn’t yet envisioned—but would merge them in a single gateway that powered the rest of the transaction journey as well.

For companies, this meant streamlining the number of different payment service providers they work with from as many as seven or eight, down to just one.

“When the idea for Zum Rails came to life, regulators in both the U.S. and Canada had been talking about building standardized systems for both open banking and instant payments for years, but still had nothing to show for it,” said Marc Milewski, CEO and co-founder of Zum Rails. “The thing is, banks and businesses don’t need the government to take the lead on these types of capabilities.”

Today, Zum Rails has not only fulfilled its goal of bringing open banking and instant payments together into a single platform. It also provides core payments services such as invoicing, subscription, advanced data aggregation and reporting.

Global Banking & Finance Review recently spoke to Milewski and Schwartz about their journey up to this point, and how Zum Rails is now working with some of the biggest names in the financial industry—including Visa, Mastercard, MX and Fiserv—to process more than $1 billion in transaction volume through its platform each month.

Getting Early Enterprise Buy-In Within a Highly Regulated Industry

Milewski and Schwartz say that they were fortunate to have an initial rolodex of customers when launching Zum Rails into the market. Where they began to experience growing pains was in selling larger enterprises on their concept without having that initial enterprise-level validation. This level of confidence is especially important in highly regulated industries like finance and payments, where customers’ personal data and finances are on the line.

The duo encountered similar hesitations in speaking with investors who all told them that open banking and instant payments were still too new and too complex for widescale adoption.

“Navigating investors ultimately ended up being the easiest of challenges to overcome in our early days. Every ‘no’ that we got was further motivation for us to prove them wrong,” said Miles Schwartz, co-founder and Chief Sales Officer, Zum Rails. “What was more difficult was demonstrating to the enterprise that our platform could handle moving large amounts of money for them in a secure and regulated way, without having existing enterprise clients to back that up at the time.”

Zum Rails quickly proved its ability to break down this barrier, however, when its unique offering began attracting attention from major financial players including Visa, Mastercard and MX.

“We built scalability into our platform from day one by creating a partner portal that enables us to work with best-in-breed SaaS companies and financial providers across the entire transaction lifecycle,” said Schwartz.

Zum Rails’ partner offerings currently include services such as Visa Direct for real-time payments, and MX for enhanced open banking capabilities.

On top of expanding the capabilities available within the Zum Rails platform, Schwartz credits these partnerships with opening the company up to a much larger share of the market and validating its offering on a broader scale.

North America is Behind the Rest of the World in Banking Regulations—Zum Rails is Plowing Ahead

Founded in Montreal, Zum Rails works with Canadian financial institutions including Questrade, the country’s largest independent online brokerage; Fairstone, a nearly 100-year-old lender to more than 3,000 Canadian businesses; and Desjardins, a financial service cooperative and the largest federation of credit unions in North America.

But the company has always had aspirations to solve payments problems for businesses across all of North America.

In late 2023, Zum Rails announced an integration with Fiserv, a Fortune 500 leader in payments and financial technology, which made Zum Rails’ services and software including payments, data aggregation and real-time transaction monitoring available to U.S. businesses.

“Using Zum Rails through Fiserv provides access not only to our services but all of Fiserv’s money management products—from one gateway. This is a big advantage for businesses as most of Fiserv’s products act independently of one another and would otherwise require multiple integrations,” said Schwartz.

Zum Rails has further plans to expand its U.S. offerings to match the full suite of services it offers in Canada.

This includes the launch of automated account validation for U.S. businesses, which will seamlessly verify an account owner’s information in real-time on the backend of the platform, so as not to disrupt the user experience. This added level of security is critical for moving payments instantly through rails such as the Automated Clearing House (ACH) in the U.S., according to Zum Rails.

Zum Rails Continues to Evolve Its Offerings Alongside the Banking and Payments Industry

As for what’s next for the company, Zum Rails is continuing to expand its capabilities beyond the initial open banking and instant payments services that it initially developed its platform around.

“When we launched Zum Rails, it was with the goal of solving a niche problem for Canadian companies that wanted to be able to move money instantly and securely at a time when the options for doing so were still very limited,” said Milewski. “These are still two very important steps of the payment journey, but we haven’t stopped there. What makes Zum Rails unique is our ability to offer steps three, four, five—and so on—as well.”

According to the company’s recent Series A funding announcement, the addition of Banking-as-a-Service (BaaS) capabilities will be one of Zum Rails’ next key areas of focus as the company continues building its platform into a one-stop-shop for emerging finance capabilities.

The forthcoming offering will integrate yet another piece of the financial puzzle into the Zum Rails platform, and give businesses the ability to not only facilitate secure, real-time transactions but immediately use their earnings like they would through a traditional bank—without having to put them into a separate account first.

Milewski continued, “There’s no payment problem that we don’t want to solve for our clients. As businesses’ needs evolve and we continue to discover new pain points that the market has yet to address, our platform will continue to evolve alongside them.”