Finovate Blog

• Payfinia has launched a new Credit Union Service Organization (CUSO) to help credit unions modernize their payments experience.
• The CUSO is launching in partnership with Star One Credit Union, which invested $4.5 million in the organization.
• Payfinia’s IPX platform will play a key role in the CUSO, helping organizations leverage FedNow to offer instant payments while providing fraud prevention.

Payfinia, which was recently spun out of digital banking tools provider Tyfone, unveiled it has launched a Credit Union Service Organization (CUSO) called the Payfinia CUSO. The aim of the new Payfinia CUSO is to “support payments modernization solutions and embedded fraud controls through an open payments platform for credit unions and industry partners.”

The launch comes in partnership with California-based Star One Credit Union, which invested $4.5 million in the organization. Star One Credit Union originally partnered with Payfinia parent company Tyfone to build Instant Payment Xchange (IPX), a payments-as-a-service (PaaS) framework to send and receive instant payments via FedNow.

Interestingly, Star One Credit Union used IPX’s direct integration with Tyfone’s nFinia Digital Banking Platform to send the $4.5 million in Seed funding. Payfinia used IPX’s fraud prevention capabilities to tailor user controls and permit higher transaction limits, allowing the funding to be sent in $500,000 increments to its account at U.S. Bank. Each transaction settled in less than five seconds.

“Star One is proud to support Payfinia and its vision of making instant payments accessible to all account holders in the U.S.,” said Star One CEO Gary Rodrigues. “The IPX solution empowers our members to take control of their cash flow. So far, the IPX solution has displaced 25% of same-day ACH transactions, with 53% fewer fraud losses compared to same-day ACH and an 83% reduction in operational overhead for P2P payment networks.”

The IPX platform was originally launched by Tyfone in July of 2023 in conjunction with the Federal Reserve’s FedNow instant payment service. Since launch, IPX has converted nearly 30% of same-day ACH credit transactions into send transactions on push instant payment systems, routing existing payment solutions through networks like FedNow.

As part of today’s announcement, Payfinia is also partnering with firms— including core processors, third-party digital platform providers, and fintechs— to help them leverage IPX to embed instant payment capabilities within their digital offerings.

“Limited resources, legacy systems, fraud mitigation, and costs to implement new payment services are primary challenges that hinder community-based institutions from adopting instant payment capabilities,” said the Payfinia CUSO General Manager Keith Riddle. “Payfinia is building an ecosystem that overcomes these limitations, enabling an open-provider approach that meets the diverse needs of community financial institutions. The IPX platform provides institutions with scalable, effective and affordable payment solutions.”

The launch of the Payfinia CUSO is a valuable addition to the CUSO landscape, as it will address the growing demand for instant payments and payment modernization among credit unions. Historically, credit unions have faced challenges in adopting real-time payment capabilities due to limited technological resources, legacy systems, and the high costs that come with upgrading technology.

Because Payfinia’s CUSO is an open payments platform, it offers credit unions an approachable and affordable path to instant payments. The open-provider approach differentiates Payfinia’s CUSO from other CUSOs because it facilitates collaborations among core processors, digital platform providers, and fintechs.

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• Paychex launched Paychex Funding Solutions, expanding its offerings into small business lending to give SMBs quick access to funds via invoice factoring.
• Paychex Funding Solutions supports B2B companies by providing capital based on customer creditworthiness to help them cover payroll, vendor payments, and growth needs.
• Paychex had previously offered small business funding in partnership with Biz2Credit.

Payroll, benefits, and HR company Paychex announced its expansion into small business lending. Called Paychex Funding Solutions, the new offering gives small-and-medium-sized businesses (SMBs) fast access to the funds they need.

The new lending product will offer businesses capital based on their total assets through invoice factoring. The solution is aimed to help B2B-focused companies meet payroll, pay vendors, and fuel growth. Applicants do not need to be a Paychex payroll client to qualify.

“Lack of capital is the top reason that small organizations go out of business – and meeting payroll obligations can be one of the biggest hurdles, regardless of the economic climate,” said Paychex Senior Vice President of Operations and Customer Experience Liz Roaldsen. “Quick access to capital when a company needs it can be the difference between a business being able to remain open or closing its doors.”

Paychex Funding Solutions offers an alternative to traditional bank loans, which often have difficult approval processes and restrictive obligations. The company’s streamlined underwriting and approval process makes decisions partially on the creditworthiness of a business’s customers. By leveraging the data around applicants’ customers, Paychex is able to service businesses that might not normally qualify for traditional loans.

In addition to using unique data in its underwriting process, Paychex will also offer its small business lenders a one-on-one consultation to evaluate their goals and finances, access to a funding specialist for customized solutions, and a team to offer guidance and support on funding options.

This is not Paychex’s first dip into the small business financing world. The company already offers users access to funding via a partnership with Biz2Credit, a revenue-based financing platform with a network of more than 1,200 lenders. Additionally, Paychex has a Paychex Promise membership service that provides payroll protection, business credit building tools, and more.

Photo by Ketut Subiyanto