While elsewhere in the world, instant payments have reached record highs, America has been left behind. Prior to FedNow’s launch, the US was ranked 33 for real-time payment usage, making up 1.2% of all payments despite 49.9% of consumers using it in 2022. FedNow is said to solve a “connectivity issue” that some expect will make real-time payments “as ubiquitous as cards.”
However, many agree that its successful adoption lies in finding suitable use cases. While demand for real-time payments has grown from customers, the viability for institutions to implement the new payment rail has called for a shift in banking mentality. In order to successfully integrate real-time payments it requires institutions to move from business hours to instant, 24/7 infrastructure and support against fraud risks.
The delay has had its upsides, allowing financial institutions to learn from real-time payment leaders when approaching the new technology’s integration. Business banking has surfaced as a sector that could benefit greatly from real-time payment infrastructure. However, the move for a sector that still relies heavily on traditional methods requires even more of a “shift” than for consumers.
Today, October 10, payment API Orum has launched its new product, Verify, to ease the way for businesses using the FedNow rail.
Reducing Business Account Verification Issues
Verify focuses on the issues businesses have in authenticating bank accounts before initiating payments.
“Businesses need confidence they are debiting or crediting a real account to ensure the payment lands safely in the bank account, but most solutions today are slow or don’t include coverage for all B2B use cases,” said Stephany Kirkpatrick, CEO and founder of Orum.
Traditionally, businesses have used a range of antiquated solutions to verify bank accounts, including slow microdeposits that have to be inputted by each user, batched historical data that fails to reflect intra-day changes, and the manual entry of end-user login credentials. Any one of these processes can take days, leading to millions in lost revenue.
“Failed payments cost the global economy over $100B each year. Lost time verifying accounts equals lost revenue and, ultimately, lost customers. This is especially true for business bank accounts, which are notoriously difficult to verify,” continued Kirkpatrick.
While other fintechs have created solutions to tackle this issue, Orum says this product is the first to be built directly on top of the FedNow payment rail, integrating into the instant payments ecosystem. The API determines in under 15 seconds whether a bank account is open and valid before initiating payments.
Built on top of FedNow, Orum uses the payment rail to leverage technology that can provide real-time account information to businesses. It eliminates the need for customer involvement in the verification process by using data transfer and automating the process.
Isabelle is a journalist for Fintech Nexus News and leads the Fintech Coffee Break podcast.
Isabelle's interest in fintech comes from a yearning to understand society's rapid digitalization and its potential, a topic she has often addressed during her academic pursuits and journalistic career.