John San Filippo
Jack Henry to Acquire Payrailz
By John San Filippo
On August 9, 2022, Jack Henry announced plans to acquire next-generation payments company Payrailz. According to the announcement, Glastonbury, Conn.-based Payrailz provides cloud-native, application programming interface (API)-first, artificial intelligence (AI) –enabled consumer and commercial digital payment solutions and experiences that enable money to be moved in the moment of need. The Payrailz platform also enables and banks and credit unions to successfully compete with industry disruptors.
“We are excited about the opportunity to add these next-generation solutions to our payments capabilities,” said Jack Henry President and CEO Greg Adelson in the announcement. “Our company is engaged in technology modernization that is supporting banks and credit unions with innovative solutions that enable them to respond to business opportunities and challenges, and to improve the financial health of their accountholders. Considering the importance of modern digital and payments strategies to financial institutions, we plan to acquire Payrailz as a strategic addition to our payments ecosystem, which enables our clients to simplify the complexity of payments, modernize their existing payment channels, and remain at the center of their account holders' payment experiences.”
To dig a little deeper into this acquisition, Finopotamus spoke with Jack Henry President of Payment Solutions Tede Forman.
A Good Fit
“Jack Henry is always looking for acquisitions where the technology and the culture fit,” said Forman. “This one was a good logical step. The technology that Payrailz has built really compliments and accelerates some of the things that we're doing.”
Forman explained that Jack Henry expects to leverage Payrailz technology to modernize its own payment offerings. “Payrailz is already cloud-native with the solutions that they've built and everything has already been modernized,” he said. “It really accelerates some of the things that we were planning on doing across our payment platform.” He added that stand-alone services like P2P and AI made Payrailz even more attractive.
Forman admitted that, at least in broad terms, there is some overlap between Payrailz and Jack Henry’s current payments systems in that they both include consumer and business bill pay. “We really feel like the fact that the Payrailz solution is already a cloud-native solution really allows us to offer that in addition to the traditional bill pay platform that we have today,” he said.
Forman also noted that the Payrailz solution is API driven, making it ideal for more modern environments. However, he also said that not all institutions are ready for a fully API-driven solution. “In today's world, you still have a lot of SSO (single sign-on) clients that aren't leveraging APIs,” he added. “So there's still that need to support SSO functionality.”
According to Forman, Jack Henry technology will also be leveraged by the Payrailz solution. “Our biller directory has been in place probably 20 years,” said Forman. “For a financial institution that might be leveraging the Payrailz product, they can now take advantage of that biller directory as an integration point into the Payrailz solution.”
No More CUSO
In 2019, Payrailz announced the formation of a credit union service organization (CUSO) called CU Railz to better serve the credit union market. Forman told Finopotamus that the CUSO will be dissolved when the Jack Henry acquisition is finalized. “The investing CUSO credit unions will be paid out,” he said. “These credit unions will then become clients of Jack Henry.”