The Financial Conduct Authority (FCA) in the UK has approved a change of control. This assures the continued operation of Railsr's clients and more than five million end-users.
Railsr is the commercial name for Embedded Finance Ltd, which will now run Payrnet UK and Payrnet UAB, both of which are Electronic Money Institution (EMI) licenced enterprises that can clear Sterling on UK Faster Payments.
Railsbank Technologies Ltd will be placed under administration as part of the consortium's purchase, and all essential business assets will be transferred to a new corporation ('Embedded Finance Limited'), which will manage the platform in the future. This will have no effect on customer service or the day-to-day operation of the services that consumers enjoy. There will be no changes to the regulated entities through which Railsr delivers services to consumers because they are not under administration and will continue to trade as before.
Due to rising financial and regulatory concerns, Railsr has apparently begun to investigate the potential of a sale through a pre-pack administration.
The corporation has suffered major financial and regulatory hurdles, raising doubts about its long-term viability. The firm announced a USD 46 million financing round in October 2022, including a USD 20 million loan facility from Singapore-based fund Mars Growth Capital. Nevertheless, because of worries over Railsr's stability, Mars sought a payback of its borrowed cash, and the business repaid the debt late in 2022.
Railsr has also been scrutinised by regulatory authorities, with the FCA reportedly auditing its UK subsidiary for several months and the Bank of Lithuania recently prohibiting its local unit from accepting new customers, citing concerns about potential violations of anti-money laundering and terrorist financing laws. Railsr's regulated UK and Lithuanian subsidiaries, known as Payrnet, are licensed electronic-money institutions that accept payments.
Railsr, originally Railsbank, was formerly seen as a potential competitor in the UK payments market, with CEO Nigel Verdon describing it as a 'near-unicorn' valued at around USD 1 billion in 2021. Railsr offers financial goods and services like as banking and wallets, cards, credit, and rewards.
Railsr is a Principal Visa and Mastercard issuer that offers Banking-as-a-Service (BaaS) and Cards-as-a-Service with services such as card issuance, virtual wallets, and BIN sponsorship. The APIs provided by the corporation make it simple for developers to include banking and card functions in their products and services.
In a study issued on September 12, 2022, management consulting company Bain & Company stated, 'Financial services integrated inside ecommerce and other software platforms accounted for USD 2.6 trillion, or roughly 5%, of total US financial transactions in 2021, and will reach USD 7 trillion by 2026.'
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