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Vixio caught up with payments API provider Orum, which has built a product on top of the new FedNow rail to instantly verify bank accounts.
The FedNow service launched on July 20, and provides the United States with an instant payments system provided by the Federal Reserve.
At the time it went live, there was much excitement about the new system. Although a recent Vixio webinar revealed that experts are also cautious about the rollout’s opportunities, many in payments feel that this was a necessary step for innovation in the US.
Some providers in this space are already building on that, such as Orum.
Earlier this month, Orum announced the launch of Verify. This is the first-ever product built on top of FedNow, the Federal Reserve’s new instant payment rail.
Stephany Kirkpatrick, founder and CEO of Orum, commented that the product can verify, within 15 seconds, whether a bank account is open and valid before initiating payments.
“The launch of FedNow allowed us to build a new technology that leverages the new payment rail to provide real-time account information to businesses,” she said.
“The rich data is sent automatically back to the business via a webhook, providing real-time results and eliminating the need for a customer to be involved in the account verification process.”
Verify will cover 100 percent of all US-based consumer and business bank accounts, Kirkpatrick explained.
“This is a major step forward in an industry still plagued by invalid credentials, friction, and fraud,” she said.
Kirkpatrick said that FedNow adds yet another infrastructure layer to an increasingly complex landscape.
“As a result, financial institutions and fintechs will be forced to figure out how to integrate FedNow across the broader payment network,” she said.
For Kirkpatrick, this challenge of interoperability creates a huge opportunity for innovation geared towards orchestrating payments across these different systems.
The CEO continued that the most significant opportunity FedNow opens up is making real-time payments more accessible to smaller, local banks in communities across the U.S.
“Increased accessibility will enable individuals and businesses in these communities to more fully participate in the financial system, opening up more opportunities for financial inclusion,” she said.
Last week, the Federal Reserve announced that more than 100 institutions are now sending and receiving on the network.
This includes large institutions such as BNY Mellon, but also smaller community banks.
The Federal Reserve has confirmed that it will introduce new features and functionality in the coming months. Updates will include select risk management and operational enhancements, which it hopes will provide additional fraud prevention tools and straightforward access to account and transaction information.
It is also tipped to introduce a tech-centric developer resource. This will enable financial institution participants to access documentation and assist with service implementation.
These include the recently updated operating procedures, technical specifications, code and message samples.
