Nuvei Links to KoreConX to Ease Investments Via Cards And Account-to-Account Transfers

The big Montreal-based payments processor Nuvei Corp. said early Wednesday it will process investments in private companies through KoreConX, a technology provider specializing in enabling such payments for individual investors. Interestingly, the arrangement includes the use of both card and account-to-account networks to route customers’ investments, with a $50 minimum, the companies said.

The agreement has global scope but will handle investments only in U.S. companies, Nuvei and KoreConX said, with the stipulation that the transfers are compliant with rules set by the Securities and Exchange Commission.

The involvement of transaction processors like Nuvei to handle payments from small investors has become more prominent in the U.S. market, the processor says, since the enactment in 2012 of the Jumpstart Our Business Startups (JOBS) Act. The law’s aim was to make it easier for small businesses and startups to raise capital from ordinary investors. But at the same time, both Nuvei and KoreConX say, many firms handling investments geared to the new law reacted with “inefficient” systems that failed to comply with SEC regulations.

Now, the opportunity in processing for this unusual market could be sizable for companies like Nuvei. “Facilitating SEC-compliant investments for entrepreneurs and private businesses is a game-changer for democratizing investing,” said Philip Fayer, Nuvei’s chairman and chief executive, in a statement.

The offer of account-to-account transfers for small-time investors could also open an important new channel for open banking, some observers say. “It’s the hot trend right now,” says Cliff Gray, a senior associate at the payments consultancy TSG. Open banking enables networks to access consumers’ bank deposits to verify ownership and balances.

Gray sees more arrangements like the Nuvei-KoreConX link taking shape in the wake of open banking’s widening availability through account-to-account networks such as the automated clearing house and the new bank-controlled real-time system FedNow and the 6-year-old Real Time Payments network from The Clearing House Payments Co. “Taking advantage of the new network infrastructure makes it a whole lot easier to do open banking,” Gray adds.