- Orum, a New York-based account-to-account payments company, has launched an account verification service built on top of instant payment network FedNow, the company said Tuesday. The service capitalizes on the July launch of the Federal Reserve's real-time system.
- The service, which is also compatible with the privately-owned RTP network, allows customers to verify a bank account within 15 seconds before sending a payment, according to a Tuesday press release.
- “What we see as a unique opportunity with FedNow is the ability to have data at the time of the transfer,” Orum CEO Stephany Kirkpatrick said in an interview last week. “You have a richness of information from which you can now make a better decision.”
FedNow’s launch in July enabled Orum to build a service that could verify a bank account in a matter of seconds, a process that used to take days and require human input. Those traditional methods open up “a big window of risk,” Kirkpatrick said.
Orum spent time with FedNow’s leadership and design team ahead of the instant payment network’s launch, Kirkpatrick said. That helped Orum see that it could use FedNow to provide businesses real-time account information. The service uses a webhook, an automatic message sent between software, to send data back to the business. That provides information about the account in real-time, removing the need for human verification of the bank account, the company said.
Orum provides business-to-business payment services and delivers access to major payment rails including ACH, Same Day ACH and wires. The company has about 40 employees and has raised about $82 million in funding since its 2019 founding.
Orum’s move comes as FedNow is facing criticism for a slow start since launching this summer. At an event hosted by Washington, D.C. think tank The Brookings Institution Friday, Fed Governor Christopher Waller was asked why a seemingly small number of banks had signed up for FedNow.
Waller pushed back on that criticism, saying that interest in FedNow has been steady, noting that “roughly 30 to 60 banks” had signed up for the July launch of the instant payment network and that “well over 100” were currently signed up. He cited estimates saying between 250 and 350 banks could join by the end of the year.
When FedNow launched in July, it was a minimum viable product, according to Waller. An MVP is a term used in software development to describe a version of a new product that has just enough features to allow early users to start providing feedback.
“Let’s get the thing out, make sure it works, see how people use it,” Waller said. “And then from there, build it out.”