TL;DR – Many fintech founders unknowingly pay a hidden tax when they rely on the same payment stack they built their MVP on. Legacy systems drag down growth, force workarounds, and create compliance debt. This guide explains why, shows how payment trends are evolving in the US and Canada, and outlines practical steps to modernize without disruption.
Legacy payment cores were designed for batch processing and paper-based settlement, not for real-time commerce. While modern APIs may give the illusion of agility, the underlying systems are still tied to COBOL cores, overnight batches and rigid data schemas. As a result, even the most ambitious fintechs are limited by three structural problems:
⬝ Scalability caps turn growth into a balancing act – success becomes a source of stress.
⬝ Integration bottlenecks delay product launches, forcing teams to build costly middleware.
⬝ Operational fragility leads to unplanned downtime and rising costs.
Fintech founders in North America feel these limits acutely. In 2024/2025, the industry talked about real‑time payments, AI orchestration and instant cross‑border transfers, yet most money still flowed through systems built for the pace of paper.
All of these issues are discussed in more depth in our article:
"How Legacy Payment Systems Held Back Growth in 2025"
Recent industry research underscores the scale of the modernization wave. KPMG found that 93% of financial institutions and 87% of retailers are actively modernizing or planning to modernize payment infrastructure within the next 6–8 months. These organizations are reacting to tangible drivers:
⬝ Changing customer expectations: Consumers and businesses expect instant settlement and 24/7 availability.
⬝ Regulatory mandates: ISO 20022 migration, open banking requirements and cross‑border data standards create compatibility pressures.
⬝ Hidden costs: Maintaining outdated systems diverts resources from innovation. FIs plan to spend US$18 million on modernization and allocate 36 people to the effort, suggesting the cost of inaction is even higher.
Real‑time payment volumes are exploding. In the US, real‑time payments grew 61% between 2019 and 2024. For Canadian fintechs, adoption of Interac e‑Transfer is ubiquitous, and the Real‑Time Rail (RTR) is expected to launch soon, bringing real‑time capabilities to a national scale.
62% of merchants expect to work with multiple providers by 2025. Payment orchestration platforms enable dynamic routing by cost, speed or geography, giving fintechs flexibility to choose among FedNow, Real‑Time Payments (RTP), ACH, card networks and Interac.
In this environment, a monolithic PSP is a risk; a modular orchestration layer becomes a competitive advantage.
US and Canadian regulators are tightening requirements around anti‑money laundering (AML), know‑your‑customer (KYC) and consumer protection. Meanwhile, 75% of end‑users say they prefer payments that settle instantly on real‑time rails.
Account‑to‑account (A2A) transfers via RTP, FedNow and Interac reduce card fees and speed up settlement, but they require robust fraud detection and data-sharing protocols.
1. Map the transaction lifecycle. Identify points of friction – manual reconciliations, nightly settlement, KYC delays – across every channel. This clarity informs prioritization.
2. Adopt a cloud‑native, modular architecture. Break out payment services into microservices or serverless functions that can scale independently. Use Kubernetes, containers or platform‑as‑a‑service offerings to avoid large re‑platform projects.
3. Integrate multiple rails via orchestration. Implement a routing layer that can connect to FedNow, RTP, Interac, ACH, card processors and local schemes. This supports cross‑border growth without rebuilding your stack.
4. Automate compliance and fraud detection. Embed RegTech services for KYC, AML and transaction monitoring. With ISO 20022 data richness and open banking APIs, rule‑based approaches are being replaced by AI‑driven models.
5. Plan for open‑banking APIs. Even before Canada finalizes its open banking framework, build systems that can securely exchange data, manage tokenized credentials and support TPP (Third‑Party Provider) access.
6. Design for stage‑specific needs.
⬝ MVP stage: Simplify integration with one or two rails (ACH and card). Use payment gateway integration for fintech MVPs and focus on a compliant foundation. Our post explains how to balance speed and trust for early‑stage products:
“FinTech MVP: Build a Minimum Viable Product That Inspires Trust and Scales”
⬝ Scaling stage: Add orchestration across rails, automate compliance and optimize for cross‑border flows. Read our previous post for guidance on aligning product roadmaps with technical capacity:
“Discovery Phase in Fintech: Avoiding the Top 5 Costly Mistakes”
⬝ Mature stage: Optimize for cost, redundancy and data analysis. Consider AI‑driven back‑office automation and new user experiences like conversational checkout. See
“From Manual to AI‑Driven: First Back‑Office Functions Fintechs Should Automate”
Legacy systems aren’t just technical debt — they shape how a company makes decisions.
When payments depend on outdated infrastructure, every new feature becomes a workaround, every compliance change turns into a delay. Modernization is the point where you stop accepting those limits.
For fintechs in the US and Canada, the shift to real-time rails, open banking, and automated compliance is already redefining what “standard” means. The companies that adapt now will move faster, scale safer, and compete globally without rebuilding twice.
That’s what modernization really delivers: room to grow, data that moves with you, and systems that stop holding the business back.
