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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
Socure has acquired risk decisioning company Effectiv for $136 million
Socure will integrate Effectiv’s AI-powered orchestration platform into its digital identity verification and fraud solutions.
The acquisition will enable Socure to enhance fraud prevention, automate identity verification, and manage risk across onboarding, authentication, payments, account changes, and more.
Digital identity verification company Socure has acquired risk decisioning company Effectiv in a $136 million deal.
The agreement, which is set to close next month, will bring Effectiv’s developer-friendly, AI orchestration and decisions platform into Socure’s digital identity verification and fraud solutions platform. Socure expects the purchase will enhance its customers’ fraud-fighting efforts while offering the ability to verify identities across the entire customer journey.
Socure will use Effectiv to create complex, combinatorial rules that apply not only to its own solutions but also to those from third parties. Effectiv will provide a unified approach to enhancing identity verification for Socure, automating risk and trust decisions across various processes, including onboarding, authentication, payments, account updates, account recovery, and regulatory filings.
Effectiv, which demoed at FinovateFall 2023, was founded in 2021 to provide an open platform that integrates a wide range of risk solutions– including identity and payment fraud controls, underwriting, Know Your Business (KYB) and anti-money laundering (AML) tools– to facilitate decisions in real-time. Using Effectiv’s technology, firms can combat identity theft, account takeover, scams, and real-time payment fraud. Among the company’s clients are Ouro/Netspend, Lightspeed Commerce, Cardless, and Payco.
Today’s move positions Socure in the $200 billion enterprise fraud industry. The Nevada-based company, which currently serves 2,700 customers, will now be able to help its clients tackle payments fraud, credit underwriting, and AML transaction monitoring.
“With a world-class platform from Effectiv and analytics that allows for adaptive and progressive risk decisioning, we will be able to help our partners with a single view of identity to drive instant risk and trust decisions anytime, anywhere,” said Socure founder and CEO Johnny Ayers.
This isn’t Socure’s first time working with the Effectiv team. The company worked with Effectiv founders Ravi Sandepudi, Ritesh Arora, Jonathan Doering, and Anupam Tarsauliya when they worked at fraud prevention platform Simility before it was acquired by PayPal for $120 million in 2018.
Logistically, the Effectiv team will join Socure. The group will work to develop and promote Socure’s platform product, engineering, data science, and will immediately contribute to its enterprise go-to-market strategy.
“Socure has uniquely built everything required to solve for new account opening at the identity level—arguably the hardest problem because it’s the first time you’ve seen the consumer,” said Effectiv CEO and Co-founder Ravi Sandepudi. “Now we can review and analyze the user’s risk profile across transactions and accounts over time, maintaining an up-to-date perspective which was impossible before.”
Sandepudi will become Head of Platform Products at Socure.
Personalizing the customer experience has consistently been a hot topic in fintech and banking over the past decade. This persistence suggests that the financial services industry continues to fall short when it comes to providing a high-quality, tailored user experience.
In the past year, we have seen significant promise from AI tools that can integrate personalization into the customer workflow while still maintaining a high-touch user experience. In today’s Streamly Snapshot, Research Analyst David Penn talks with Craig MacLaughlin, CEO at Finalytics.ai and Baron Conway, CSO at Finalytics.ai about the meaning of personalization, how financial institutions stand to gain from it, the role AI is playing in enhancing personalization, and how firms can embark upon their journey of personalization.
“The ability to deliver the high-touch service– something you were able to do on the phone or in the branch– has really been taken away. So we look at the opportunity to use personalization to get back that experience, but deliver it digitally,” said MacLaughlin. “We’re basically giving community FIs the ability to deliver the same experiences that mega brands are able to do in the digital channel.”
“So to build upon that,” added Conway, “from an institution’s perspective, it enables them, in the digital channel, to build closer relationships, build more loyalty, and– crucially– drive more product sales. Because, if you give someone what they’re looking for, they’re more likely to engage, and purchase, and come back for more.”
Finalytics.ai seeks to help community banks and credit unions compete with larger organizations by helping them personalize the customer journey. The California-based company leverages AI along with real-time data analytics to help drive growth, loyalty, and operational efficiencies.
By blending personalization and innovation, Finalytics.ai helps its financial institution clients meet the evolving needs of their customers in today’s competitive landscape.
Moneybox raised $90 million (£70 million) in a round led by Apis Global Growth Fund III and Amundi.
Today’s investment boosts Moneybox’s total funding to $213.4 million (£165 million).
Moneybox has grown rapidly, achieving an 84% increase in valuation since 2022, and will use the funds to further innovation and strengthen its market position.
Savings and investment platform Moneybox landed $90 million (£70 million) today. The round was led by Apis Global Growth Fund III and includes funds from Amundi.
“We are excited to welcome Apis and Amundi, who share our vision for how we can help millions of customers build wealth so they can live the life that they want – whether that’s saving for their first place in their 20s, being their own boss in their 40s, or taking the gap year that they never got round to in their 60s,” said Moneybox Co-founder and Executive Chair Ben Stanway.
Today’s funds boost the U.K.-based company’s total funding to $213.4 million (£165 million). This investment will largely be achieved via a secondary share sale in which existing investors will sell 10% to 15% of the current share capital.
“We are also delighted to be able to facilitate this secondary share sale to recognize the hard work of our team and also our investors, many of whom have supported us since inception. We want to enable our shareholder community to realize some of the value of their investment at this important juncture,” added Stanway.
Founded in 2015, Moneybox offers investing, saving, pension, and home-buying Lifetime ISA tools in a single app. The company, which currently counts one million users and surpassed £10 billion in assets under administration in 2023, will use today’s funds to further its innovation, build on its growth, and ultimately strengthen its market position.
The investment comes two-and-a-half years after Moneybox’s £35 million ($45 million) Series D round in 2022, which valued the company at $388 million (£300 million). Moneybox has made an impressive acceleration since then, boosting its valuation by 84% to $711 million (£550 million).
“Moneybox is revolutionizing the way people approach personal finance by making saving and investing more accessible and understandable,” said Apis Co-Founder and Managing Partner Matteo Stefanel. “Moneybox’s mission to help everyone save and build wealth for the future aligns with Apis’ democratisation of finance theme and Impact goals, and we’re excited to support the team in this phase of their journey.”
Today is a day the U.S. financial services community has been waiting for for at least a year– the Consumer Financial Protection Bureau (CFPB) issued its final 1033 rule making. The new rule, issued in the form of a 594-page document, aims to enhance consumers’ rights, privacy, and security over their own personal financial data.
In order to accomplish this, the CFPB is requiring financial institutions, credit card issuers, and third-party fintech providers to make consumers’ personal financial data available to transfer to another provider for free. As a result, consumers will be able to add or switch providers in order to access better rates, receive better terms, and find services that best suit their needs. The CFPB states that the rule promotes competition and consumer choice, and will ultimately help improve customer service.
“Too many Americans are stuck in financial products with lousy rates and service,” said CFPB Director Rohit Chopra. “Today’s action will give people more power to get better rates and service on bank accounts, credit cards, and more.”
Today’s rule comes about a year after the CFPB issued a much shorter, 29-page document that proposed the change. So, aside from the document length, how does last year’s proposal differ from this year’s official ruling? Here are a aspects to note.
As you may expect the final ruling provides a much more comprehensive and detailed explanation of the CFPB’s approach to regulating consumer access to financial data. The new document offers the rationale behind the rule, defines key terms, specifies requirements for data providers and third parties, and analyzes the rule’s potential impact on the market. Here are some specific differences between the proposed rule-making and today’s official rule.
Transitioning away from screen scraping
The final rule-making discusses the issues of screen scraping and emphasizes the aim to promote safer and more standardized methods to access data via developer interfaces.
Liability considerations
Today’s rule touches on the liability that stems from data sharing and explains the CFPB’s approach to addressing the liability with regulations and industry standards.
Interaction with other laws
The final rule includes a discussion on how it interacts with other existing laws, such as the Fair Credit Reporting Act (FCRA) and the Gramm-Leach-Bliley Act (GLBA).
CFPB oversight and enforcement
The rule released today includes the CFPB’s plans for overseeing and enforcing the rule’s requirements, including details on supervising third parties and addressing consumer complaints.
Scope of data coverage
The final rule offers a detailed look at the types of data covered by the rule, including discussions about specific data fields and potential exclusions.
Definition of consumer
Today’s rule specifically defines what constitutes a consumer for the purposes of the rule. It also offers explanations about why it includes trusts established for tax or estate planning purposes in its definition of consumers.
Requirements for developer interfaces
The final rule lays out specific requirements that data providers must adhere to when it comes to the performance, security, and functionality of their developer interfaces.
Prohibition on fees
Today’s rule offers an explanation on why it is prohibited to charge fees to access data.
Authorization and revocation procedures
The final rule details how consumers can authorize and revoke third-party access. It also discusses what organizations must put into their authorization disclosures, and details the consumer notification process.
Third-party obligations
Today’s final rule details obligations for third parties that access consumer data, including limitations on data collection, use, and retention, as well as requirements for data accuracy and security.
Impact analysis
The final rule analyzes the potential benefits and costs of the rule for various stakeholders, including data providers, third parties, and consumers.
After rumors swirled over the weekend, we now know that it is official: payments processing company Stripe has acquired stablecoin platform Bridge for $1.1 billion.
For Stripe, which was valued at $70 billion earlier this year, the Bridge deal marks its largest acquisition since it was founded in 2010.
Bridge was founded in 2022 to serve as an alternative payment method to compete with SWIFT and credit cards. The company’s technology allows businesses to move, store, and accept stablecoins using just a few lines of code. Companies can also leverage Bridge’s Issuance APIs to issue their own stablecoin and accept USD, EUR, USDC, USDT or any other stablecoin. After integration has taken place, companies can move money near-instantly and at a low cost around the globe.
“As we’ve gotten to know the Stripe team, it’s become clear that we both share a vision for what’s possible with stablecoins and an excitement around the opportunity to create and build this future,” said Bridge Co-Founder Zach Abrams in a LinkedIn post. “Stripe operates globally and understands better than almost anyone the problems created by our existing localized payment systems. Our teams share an excitement about stablecoins and vision for how to maximize their impact. Together, we’ll be able to solve bigger problems, support more developers, and help more consumers and businesses all across the world.”
Stripe processed $1 trillion in payment volume in 2023, a metric that places the fintech among the top payment processors in the U.S. With this influence, there are a few implications that Stripe’s Bridge acquisition holds for the U.S. stablecoin market.
Increased stablecoin adoption
Once it integrates Bridge’s technology, Stripe will be able to offer instant, low-cost settlements through stablecoins. Creating a low-cost alternative to traditional payments will make stablecoins more attractive for businesses and could lead to wider adoption in mainstream payment systems.
Cross-border payments expansion
The Bridge acquisition may enable Stripe to enhance its global payments infrastructure. This will place stablecoins as a go-to method for faster, cheaper cross-border transactions. In today’s landscape, where large, traditional players are developing new tools for cross-border payments, many still face high fees and longer settlement times. Stripe’s usage of stablecoins will help it circumvent many of those issues.
More competition
Stripe’s entry into the stablecoin space will increase competition among fintechs offering stablecoin-based payment services. The introduction of Stripe’s real-time, cross-border payment service may pressure other companies to create new offerings or improve their existing products to keep up with Stripe’s client base and new resources brought on by today’s acquisition.
Regulatory focus
As Stripe begins to use stablecoins in more traditionally regulated financial environments, it may gain the attention of U.S. regulators. This increased attention toward the stablecoin space may prompt regulators to increase enforcement efforts and could even lead to them creating clearer guidelines around stablecoin use.
Stripe’s acquisition of Bridge will position it as a key player in the stablecoin space. With Stripe’s long-standing payment processing infrastructure and global reach, once Stripe integrates Bridge’s stablecoin technology, it is poised to accelerate stablecoin adoption across mainstream payment systems.
Mastercard launched Move Commercial Payments, a real-time cross-border payments solution that operates 24/7.
The new commercial payments tool leverages a multi-rail system that includes SWIFT and Mastercard’s proprietary networks.
Move Commercial Payments offers features like liquidity management, integration with existing SWIFT systems, and helps to reduce counterparty risk.
Mastercard unveiled an offering this week that will allow commercial users to make cross-border payments in near-real-time. The payments giant introduced Mastercard Move Commercial Payments today, which facilitates payments 24 hours a day, 365 days a year.
Mastercard Move Commercial Payments leverages a multi-rail approach that includes SWIFT, and Mastercard’s proprietary networks to facilitate the cross-border payments. Relying on multiple rails enables banks and their commercial clients to send near-instant, transparent, and predictable transactions any time of day, any day of the week.
Cross-border payments have become increasingly crucial for businesses operating in a global economy. According to a 2023 McKinsey study, global payments revenue grew by double digits in both 2021 and 2022. However, many businesses still struggle with cross-border payments, frustrated by hidden costs and unpredictable settlement speed.
Mastercard Move Commercial Payments offers more than just real-time settlement. The tool also includes several features designed to enhance its value for banks. These features include multiple settlement options that improve liquidity management, a multi-party arrangement to reduce counterparty and default risks, integration with existing SWIFT messaging systems, and compatibility with current correspondent banking relationships. These elements help banks maximize operational efficiency while minimizing risk.
“By powering fast, predictable and transparent payments, Mastercard Move Commercial Payments will bring what is already the norm in domestic payments to the commercial cross-border payment space,” said Mastercard Head of Transfer Solutions Alan Marquard. “Our latest product innovation aims to directly address the pain points that are currently affecting the commercial cross-border payments market. By shifting to this new model, they will be empowered to generate new revenue streams while reducing risk and enhancing the offering for their corporate customers.”
Mastercard Move Commercial Payments, which is part of the company’s Move portfolio, was piloted in the U.K. with Lloyds Banking Group and UBS. This initial phase marked an important step in refining the platform’s capabilities for large-scale deployment. By collaborating with major financial institutions, Mastercard was able to validate the efficiency of its multi-rail payment system, demonstrating the platform’s market readiness and paving the way for broader adoption.
Mastercard’s launch competes with Visa’s real-time payments solution called Visa Direct, which enables fast and secure money movement to different endpoints across the globe. Similar to Mastercard’s Move Commercial Payments, Visa Direct also leverages a multi-rail approach that supports card-based and account-to-account transfers that integrate with The Clearing House RTP and FedNow.
Today’s launch comes amid a string of other payments-related news releases this month, as both fintechs and traditional financial services firms seek to capitalize on the recent consumer awareness of real-time payments generated from last year’s FedNow launch. Just last week, for example, we covered news from Worldline, which unveiled an account-to-account transfer tool in Europe, Tyfone’slaunch of Payfinia instant payments solution, and Token.io’s real-time payments partnership with Santander.
News in the payments space has been heating up this month, with announcements from Mastercard, Stripe, Token.io, Worldline, and Tyfone shaking things up. What’s next for payments? Stay tuned throughout the week to read the latest news this week as we post updates and evolutions.
Bank technology
Tompkins Community Bank selectsNCR Atleos ATM-as-a-Service to strengthen self-service banking.
Payments
Canvapartners with EBANX to provide local payment options for customers in Latin America.
The round also featured participation from Icehouse Ventures, K1W1, NZ Fintech Fund, and Hard Yaka, a venture capital firm based in the U.S. Emerge will use the capital to support adding talent in marketing, sales, and product development. The company will also use the funds to accelerate its go-to-market strategy, including offering banking services to startups.
“Emerge was built to help Kiwi businesses do more, faster, better,” Emerge Co-founder Jovan Pavlicevic said. “In just a few minutes, you’ve opened as many Emerge accounts as you need, with features better than the banks, and team cards ready to go.”
A digital-first banking alternative, Emerge offers companies a single platform to manage their business finances. Emerge’s technology simplifies expense tracking, enables the creation of debit cards — including an unlimited number of virtual cards — and allows users to make and receive payments with a New Zealand business banking account backed by ANZ. Emerge provides bookkeeping and reporting tools and makes it easier for companies to track and manage their finances with a centralized view of their data. The company has also launched a service called EmergePay that converts a smartphone into a payment terminal.
Emerge evolved from a children’s financial literacy app called SquareOne that Pavlicevic and co-founder Jamie Jermain founded in 2020. Emerge was developed in January 2024, as the company shifted its focus toward providing banking services for SMEs, with the ultimate goal of becoming a neobank.
Headquartered in Auckland, Emerge was named to the Forbes Asia “Top 100 to Watch” in August.
FirstCape deploys wealthtech from InvestCloud
New Zealand’s largest wealth advice and asset management company, FirstCape, has partnered with InvestCloud to enhance the wealth management experience for advisors and clients alike. The deployment will help FirstCape increase the efficiency of its advisors, as well as provide a single platform for client engagement, experience, and advice at scale.
“We formed FirstCape with a stated intention of enhancing our client offering,” FirstCape CEO Malcolm Jackson said. “Integrating InvestCloud’s tools that streamline portfolio management and order execution is part of delivering on that promise. We continue to be focused on providing a complete suite of services tailored to every client’s unique needs at whatever stage of their investment life cycle.”
With more than 120 advisors and more than $30.3 billion (NZ $50 billion) in assets under management, FirstCape was forged earlier this year through the combination of four entities: JBWere NZ, Jarden Wealth, Harbour Asset Management, and BNZ Investment Services. The company has already deployed two InvestCloud solutions: Portfolio Manager and Order Capture. Portfolio Manager enables advisors to manage client portfolios with deeper insights that lead to tailored investment proposals. Order Capture provides a seamless interface for trading across asset classes, boosting operational efficiency by enabling advisors to act faster in response to client needs.
“We are thrilled to see the tangible success of our partnership with FirstCape as they embark on this modular digital transformation,” InvestCloud President of Digital Wealth International Christine Mar Ciriani said. “By leveraging our full suite of innovative front-office solutions, we are helping FirstCape create a robust digital backbone that will drive their growth, streamline advisor efficiency, and elevate client experiences.”
A global wealthtech company, InvestCloud serves wealth and asset managers, wirehouses, banks, RIAs, and insurers. InvestCloud’s clients represent more than 40% of the $132 trillion in total assets globally. A provider of digital wealth management and financial planning solutions since 2010, InvestCloud was named a CNBC “World’s Top Fintech Company” earlier this year. The firm is headquartered in West Hollywood, California.
International payments specialist Ebury arrives in New Zealand
Ebury, a specialist in international payments and collections, opened new offices in New Zealand this week. The move is designed to help the company provide a range of services to SMEs in the country, including cash management strategy and foreign exchange risk management.
“At Ebury, we embrace the complexity and risk of daily cross-border payments that enable business growth, in a way that traditional banks do not, or cannot,” Ebury Managing Director for APAC, Rick Roache said. “We make the sophisticated products and services that banks typically reserve for their biggest clients accessible to SMEs.”
The New Zealand office represents Ebury’s 40th office worldwide, and comes six years after Ebury expanded to neighboring Australia. The move to New Zealand also supports the company’s presence in nearby Shanghai and Shenzhen in China.
“Right now there are few options for SMEs looking for cross-border payment solutions and local advice in New Zealand,” Roache added, “so we’re really excited to bring our innovative technology platform into the market supported by a ‘boots on the ground’ team that differentiates us from other providers.”
Headquartered in London and founded in 2009 by a pair of Spanish engineers, Ebury serves primarily SMEs and mid-cap companies with payments, collections, and foreign exchange services in more than 130 currencies. Santander acquired a minority stake in the company for $459 million (£350 million) in 2020, and added to its stake two years later. With more than 1,700 employees across 25 countries, Ebury is reportedly preparing for an IPO in 2025 that would value the company at as much as $2.2 billion (£2 billion).
Here is our look at fintech innovation around the world.
Latin America and the Caribbean
Warburg Pincus acquired a minority stake in Brazilian accounting-based fintech Contabilizei for $125 million.
PXP Financial teamed up with Latin American payments platform Kushki.
Brazilian paytech Barte raised $8 million in Series A funding in a round led by AlleyCorp.
Asia-Pacific
Singapore-based finance platform for businesses, Aspire, secured in-principal approval for the Major Payment Institution license from the Monetary Authority of Singapore (MAS).
Bank of Hangzhou teamed up with Malaysia’s Maybank to support Chinese businesses as they expand operations in Southeast Asia.
Vietnamese private bank VPBank partnered with customer engagement platform CleverTap.
Sub-Saharan Africa
Somalia’s Premier Bank has teamed up with Mastercard and Tappy Technologies to launch Tap2Pay, a tokenized-passive payment wearable.
Fintech provider Flutterwave partnered with 9jahotel.com to launch a point-of-sale system to enhance hotel management in Nigeria.
Nigerian cryptocurrency exchange Yellow Card secured $33 million in Series C funding.
Central and Eastern Europe
Romanian payment service Pago secured $2.5 million (€2.3 million) to fuel expansion.
Budapest, Hungary-based B2B payment solutions provider, PastPay, raised $13 million (€12 million) in Series A funding.
Fingular, a neobank based in Singapore, launched a new digital lending business in Bangladesh.
TBC Bank Uzbekistan secured a $10 million line of credit from Switzerland’s responsAbility Investments AG. Read our Finovate Global interview with TBC Bank Uzbekistan’s Head of International Business Oliver Hughes.
One of the most popular use cases for AI in financial services is to leverage the technology to help companies deal with the challenge and opportunity of unstructured data.
In our latest Streamly interview from FinovateFall last month, Finovate VP and host Greg Palmer sits down with Perry Rotella, Managing Director of Financial Services at Box, to discuss the growth of unstructured data within financial institutions, the challenges these firms face in managing this data, and the role AI can play in helping them analyze unstructured data to enhance everything from personalization to compliance.
“Unstructured data really represents the vast majority of data in organizations. IDC did a study last year that found that 90% of an organization’s data is unstructured. And it’s been really challenging to extract insights out of that data at scale. What we’ve been finding working with customers is we can supercharge pulling insights out of that content, driving workflows for downstream processing, and really look across many documents to summarize and personalize communications with clients.”
The “Intelligent Content Cloud” company, Box offers a single platform that enables organizations to drive collaboration, manage the content lifecycle, secure critical content, and transform business workflows using enterprise AI. Founded in 2005 and headquartered in Redwood City, California, Box includes AstraZeneca, Morgan Stanley, and Nationwide among its customers.
In his role as Managing Director, Financial Services, Rotella provides leadership across product, marketing, business development, sales, and customer success teams. He is responsible for driving engagement with key strategic accounts, as well as customer satisfaction and retention.
Apex Fintech Solutions has agreed to acquire fintech design agency, FinTron. Terms of the transaction have not been disclosed.
The digital wealth management company will leverage FinTron’s technology to provide its customers with the ability to create customized user interfaces and experiences.
Apex Fintech Solutions’ subsidiary Apex Clearing made its Finovate debut at FinDEVr Silicon Valley in 2015.
Digital wealth management company Apex Fintech Solutions has agreed to acquire FinTron, a fintech design agency that creates high-end digital experiences for investors and advisors around the world.
Terms of the transaction were not disclosed and the deal is subject to approval by FINRA. Once completed, the strategic acquisition will enable Apex’s customers to deliver customized user interfaces and experiences for brokerage platforms that are pre-integrated into the Apex platform. This will enable them to easily deploy turnkey investing experiences and front-ends from within their current digital footprint, powered by Apex’s custody platform.
“FinTron has revolutionized the process of launching a brokerage or wealth management platform,” Apex CEO Bill Capuzzi said. “Their innovative platform aligns perfectly with our mission to empower the next generation of investors through technology. This acquisition is a significant step in our journey to provide a fully integrated, digital-first platform that meets the diverse needs of our clients.”
Known for its white-label and embedded components, as well as its Software Development Kit (SDK) for mobile and web platforms, FinTron empowers brokerages and wealth management firms to embed self-directed and managed investing functionality into their offering. Apex will leverage its acquisition of FinTron to expand its services to clients ranging from financial advisors and fintech firms to neobanks, insurance companies, and retirement planning companies. In fact, FinTron’s technology already has been integrated into the company’s suite of services to streamline investment processes, enhance the user experience, and bring more advanced investment capabilities to a wider audience of investors.
“We are thrilled to join forces with Apex,” FinTron CEO and Founder Wilder Rumpf said. “Our shared vision of democratizing financial services and providing intuitive, powerful tools to investors will only be strengthened through this partnership. Together, we can make a significant impact on the financial futures of many.”
Headquartered in Stamford, Connecticut, FinTron was founded in 2017. The company has raised more than $14 million in funding from investors including Connecticut Innovations and Sage Venture Partners. FinTron’s embedded wealth solutions help broker-dealers, community banks and credit unions, investment advisors, and fintechs lower CAPEX and time to market, capture engagement, and offer clients versatile digital wealth experiences.
Apex Fintech Solutions introduced itself to Finovate audiences at our developers conference, FinDEVr Silicon Valley in 2015, via its subsidiary, Apex Clearing. Recently, the New York-based company launched its real-time cloud-native investment infrastructure, Apex Ascend, and announced a collaboration with wealth management solution provider YourStake. FinTron is Apex’s fourth acquisition; the firm purchased AdvisorArch, its third acquisition, in March of this year.
Worldline has launched Bank Transfer by Worldline, an account-to-account payment tool.
The new pay-by-bank solution enables retailers to accept bank draft payments and handle high-value transactions, including B2B payments, across 10 European countries.
Bank Transfer by Worldline also facilitates cross-border payments, leveraging Worldline’s open banking network to connect with over 3,500 banks, providing merchants a seamless way to initiate payments directly from customer bank accounts, reducing transaction fees and declines.
Payments services company Worldline is launching yet another payment tool this week. After debuting its embedded payments tool earlier this month, the France-based company is launchingBank Transfer by Worldline, an account-to-account payment method.
The new pay-by-bank solution enables retailers to accept bank draft payments and allows for non-traditional payment methods, including invoices and high-value transactions. Bank Transfer by Worldline boasts many of the same benefits that popular pay-by-bank tools offer.
The solution is notably different from traditional pay-by-bank offerings in the U.S. because it facilitates cross-border payments. This is key for merchants operating across multiple geographies. Additionally, the new payments tool specializes in high-value transactions– including B2B transactions– that typically incur higher fees and reduces the number of declined transactions, since funds are validated directly from the bank account.
“With Bank Transfer by Worldline, we have developed a payment method grounded in trust and simplicity, leveraging existing European payment networks and offering innovative customer experience,” said company Head of Merchant Services Paul Marriott-Clarke. “This launch reinforces our commitment to making payment solutions accessible for all.”
Bank Transfer by Worldline, which went live in August of 2024, allows merchants to accept payments from around 300 million customers. After a nine-month pilot phase, the solution now counts about 500 Worldline merchants clients using Bank Transfer by Worldline’s online payment solutions and pay-by-link services.
“By integrating Worldline’s open banking solution, which connects to over 3,500 banks across European countries, Bank Transfer by Worldline offers merchants a solution that simplifies payment initiation via bank transfer and unifies the customer experience,” said Worldline Head of Financial Services Alessandro Baroni.
The new tool is available for merchants in 10 European countries, including Austria, Belgium, Croatia, France, Germany, Italy, Luxembourg, the Netherlands, Slovenia and Spain. The company aims to launch in another four regions– Poland, Slovakia, Czech Republic and Hungary– by the end of 2024. Eventually, Bank Transfer by Worldline will be available to all eligible merchants across the EU.
FedNow, the U.S. Federal Reserve’s instant payment service went live in July of 2023. Now, 15 months later, adoption rates have been unpredictably slow, especially when it comes to banks that are able to send FedNow payments.
Before considering the challenges behind sending and receiving FedNow payments, here’s a look at some of the data behind adoption rates:
Only around 900 financial institutions have connected to the FedNow network, a fraction of the 8,000 firms the Fed stated as its goal.
Close to 60% of the financial institutions on board with FedNow can receive payments, while only 40% of firms have signed up to send payments.
Banks connected to the FedNow network range in size from under $500 million to more than $3 trillion in assets.
Of the FedNow participants, 78% are community banks and credit unions.
There are a handful of reasons why firms might be hesitant to participate in FedNow. The service faces competition with The Clearing House’s RTP platform, which was launched well before FedNow went live. Additionally, banks may be holding back because of the fees that come with participating in FedNow. Banks must pay $25 per month per routing transit number to use the service, plus a $0.045 per credit transfer fee charged to the sender and a $0.01 per RFP message, charged to the requestor. The Fed also charges a liquidity management fee of $1 per transfer.
Another reason firms may be reluctant to join FedNow is that the new payment rail comes with a set of challenges for both sending and receiving payment. Below, I’ve outlined five challenges financial institutions face for accepting FedNow payments, and five challenges they face when receiving FedNow payments, along with strategies to overcome each obstacle.
Challenges in accepting FedNow payments
1. Transaction validation in real time Firms may have difficulty validating incoming payments instantly, especially considering the need to check for insufficient funds and fraud, plus ensure compliance, all in real time.
To combat this, firms can implement automated validation systems to check the accuracy, authenticity, and compliance of payment transactions in real time. They can also use AI tools for fraud detection to help banks validate transactions without human intervention. Additionally, they should enhance their AML compliance systems to conduct rapid checks.
2. Managing customer disputes Customer disputes are always a headache when facilitating payments. And with instant payments, customer disputes can be even more of a challenge. That’s because instant payments reduce the time that dispute resolution can take place, since the funds are transferred immediately.
Banks should create dedicated customer service channels and clearly communicate the dispute resolution process to consumers. Additionally, banks should create robust communication procedures with other banks in the FedNow network in order to resolve reversals and other issues quickly.
3. Handling a high volume of payments If the adoption of FedNow grows, banks will need to process higher volumes of payments as more customers use the new payment rail. This increase could strain legacy systems– especially if they are not optimized for 24/7 processing at high volumes– and ultimately lead to payment delays.
To overcome this, banks should scale their payment processing infrastructure by adopting cloud solutions and ensuring they have sufficient bandwidth to handle high transaction volumes, especially during peak times.
4. Ensuring compliance in real time Just as they do with ACH payments, banks need to ensure they are complying with regulatory requirements, including KYC, AML, and other regulations. This is an additional challenge with FedNow payments, since the compliance checks and documentation need to be made in real time.
Banks can leverage automation for compliance checks and integrate real-time monitoring tools into their operations to ensure that incoming payments are compliant without delaying the transaction. As with all compliance training, firms should ensure that their compliance officers’ training is up-to-date. Fortunately, there are multiple regtech solutions, including ComplyAdvantage, Trulioo, and Fenergo, available to help.
5. Creating a seamless user experience In today’s digital age, consumers are not only used to receiving things instantly, they expect it. With instant payments as the standard, any delays or issues in receiving funds could create a poor user experience and tarnish the bank’s brand.
To ensure the best user experience, banks should first invest in a user-friendly interface. Transparent and timely communication is also key. Firms should offer real-time notifications and ensure that customers have easy access to their transaction history.
Challenges in sending FedNow payments
1. Ensuring adequate liquidity With the recent increased scrutiny on adequate liquidity, it is essential that banks ensure they have enough funds on hand. With instant payments, banks must have sufficient liquidity available at all times, even during weekends and non-business hours.
To overcome this, firms can implement real-time liquidity monitoring systems and use the Federal Reserve’s liquidity management services. Banks should also establish internal controls to maintain and managing their liquidity reserves effectively.
2. Maintaining 24/7 availability This may be one of the biggest headaches for banks looking to send FedNow payments. Because FedNow operates 24/7, banks need to ensure they have adequate infrastructure and staffing to support continuous operations. This can be a particular headache for smaller institutions, which lack resources to support such uptime.
To keep up with availability requirements, banks can adopt automated processing systems, use cloud-based solutions to keep their operations scalable, and partner with third-party vendors who offer 24/7 payment support. Additionally, firms should conduct regular system maintenance during non-peak hours to ensure they are not disrupting operations.
3. Ensuring fraud and security protection Just as when receiving instant payments, accepting instant payments does not leave banks much time to identify and stop fraudulent transactions. This increases the risk for loss.
Banks can add a layer of protection by deploying real-time fraud monitoring systems to detect suspicious activities using AI and machine learning. Also, firms can implement advanced consumer authentication methods and mandate ongoing fraud prevention training for staff to further mitigate risks.
4. Managing customer payment errors With instant payments, there is not much time to correct mistakes. When consumers fat-finger the payment amount or send the funds to the wrong recipient, they lose the opportunity to correct errors. This could not only create customer dissatisfaction, but also lead to financial losses.
Fortunately, there are ways to mitigate such mistakes. Banks can add confirmation steps into the user interface that require users to verify payment details before the transaction is sent for processing. It is equally as important to educate customers about the finality of real-time payments and provide them with a clear process for dealing with errors.
5. Creating interoperability with other payment networks As with other payment rails, banks need to ensure their systems are compatible across other systems. Banks should create a system that is not only compatible with FedNow, but also with other real-time payment systems, including The Clearing House’s RTP.
To ensure compatibility, banks can invest in unified payment platforms that integrate multiple payment rails. Additionally, firms may find it helpful to participate in industry-standard development efforts to help shape the conversation around compatibility and functionality.
