Orum launches direct access to the Fed with Deliver API

Today, payments fintech Orum has announced that it now has a direct connection to the Federal Reserve. It is currently live with FedACH and will be adding FedNow and FedWire services in the near future.

This is a big deal for a fintech to be able to connect directly to the Fed, as there are very few with this capability, it is typically reserved for banks. Orum had to pass a rigorous due diligence process as well as the Fed’s stringent contracting and IT requirements.

I caught up with Stephany Kirkpatrick, CEO and Founder of Orum to discuss this important step. I asked her why this is a big deal for Orum and its customers.

“We’re just really excited to be in a position to be one of really the first and among the only fintechs to achieve the direct connection to the Fed,” said Kirkpatrick. “Because that direct connection means we can move money even faster, more more reliably, and we can offer bank rate pricing to our customers.”

The reality is that most fintechs and even quite a few banks do not have direct access to the Fed’s payment system. They must rely on other banks or their core provider to gain that access. So, a fintech can often be two or even three layers removed depending on their bank partner. Which adds cost to the process.

“There’s a layering that typically happens in payments, which adds cost, latency and friction. And when you have an alternative, which hasn’t existed before, and now does to bypass the cost layers, the latency issues, the friction and the stack, it opens the door for us and for our current and would be prospects to be thinking about payments differently than we have historically.”

Fintech companies are playing a crucial role in facilitating new payments advancements. They are bridging the gap between traditional banking systems and modern payment needs, especially for smaller banks that may not have the resources to directly connect with the Federal Reserve.

The reality is that today’s payments landscape is complicated. The Fed processes ACH, Same Day ACH, FedWire and FedNow while there is also RTP from The Clearing House. Without an orchestration layer that can connect into all of these systems payments can be slower and more expensive.

And with the instant payments landscape growing rapidly right now, the need has become urgent. Small businesses and consumers do not want to think about payment methods they just want their bank or fintech provider to process the payment quickly and securely.

Orum has been live with ACH and same day ACH with its customers for the last several months. Today, they are rolling it out more broadly with the official launch of Orum’s new Deliver API. Fintechs will receive bank-rate pricing, have access to all major payments rails as well as expanded processing windows. The last Fed window is typically at 11pm ET which gives a lot more flexibility particularly for west coast customers.

When I asked Kirkpatrick about Implementation time she said it is typically two weeks or even less. This is a lot less time than it takes to build a direct bank integration.

While most of these payments rails supported by the Fed today will be around for a long time, decades most likely, the move to instant payments is an unstoppable trend. And interoperability between the FedNow and RTP payments systems will be key. The good news is that both use the same messaging standard, ISO20022.

Kirkpatrick recognizes the importance here:

“I think this milestone helps us realize the full extent of the instant payment promise, lower cost through bank rate pricing, no downtime, full coverage, because we navigate both systems, and smart, efficient routing that’s built in automatically to the software, it’s a pretty unbeatable way to think about payments.”

For more on instant payments look for my podcast interview with Mark Gould, the head of FedNow which is coming out tomorrow. I will place the link here when it has been published.

  • Peter Renton

    Peter Renton is the chairman and co-founder of Fintech Nexus, the world’s largest digital media company focused on fintech. Peter has been writing about fintech since 2010 and he is the author and creator of the Fintech One-on-One Podcast, the first and longest-running fintech interview series.