Zūm Rails closes Series A funding round

Canada-based payment gateway Zūm Rails has closed a Series A funding round at CAD$10.5 million, led by Arthur Ventures, as it eyes continued growth in the US and the launch of new banking-as-a-service features.

It is the first time that Zūm Rails has turned to external investors, having been self-funded since its inception in 2019.

Zūm Rails, which is located in Montreal, offers a payment gateway and ecosystem to its users, enabling the processing of digital payments, such as Interac, Visa Direct and ACH.

It now processes more than $1 billion of payments each month on its platform, for companies including Questrade and Desjardins.

Co-founder and chief sales officer Miles Schwartz wrote on LinkedIn: “The reason for the raise is centered around the product, we already have the best payment gateway, now is the time to further our competitive advantage through building and acquiring complementary technology and continuing our US expansion at full speed.”

The company will use the injection of capital to accelerate its product development, “fuel” its ongoing launch into the US, expand its team of more than 40 employees, and “enhance our platform to start offering complementary services to our users while continuing to deliver the best software for Open Banking and instant payments”, said a Zūm Rails post on LinkedIn.

Schwartz told TechCrunch that Zūm Rails plans to introduce new banking-as-a-service features for merchants and confirmed it is working on a FedNow offering in the US that, once live, means businesses will be able to send and receive FDIC-insured payments.

The US Federal Reserve’s instant payment system FedNow went live in July last year.

It has been reported that Ryan Kruizenga, partner at Arthur Ventures will join the board of directors at Zūm Rails.

Last year, Zūm Rails partnered with US-based Open Finance fintech MX Technologies to power money movement and “seamless” payments for customers of Canadian financial institutions and fintechs.