Terms were not disclosed, but the announcement today that Mastercard has agreed to acquire real-time anti-fraud solution provider Ethoca is another sign of how seriously financial services firms are taking cybersecurity.
The deal, which is expected to close in Q2 of this year, will allow Mastercard to leverage Ethoca’s network of more than 5,000 merchants and 4,000 financial institutions to fight digital commerce fraud in general and the challenge of chargebacks in specific.
Ethoca’s technology enables merchants to get real-time data when potentially fraudulent transactions are spotted. This empowers merchants to analyze transactions and confirm, stop delivery, and/or reverse transactions before the chargeback process begins.
Calling Mastercard “a natural home,” Ethoca CEO Andre Edelbrock looked forward to extending the reach of the company’s anti-fraud solutions. “For more than a decade, we’ve connected e-commerce businesses with banks to make the payments system simpler and more secure,” Edelbrock said. “We are excited to have the opportunity to bring our service to more places and people, ultimately contributing to the best possible online payment experience.”
In a statement, Mastercard said that it plans to scale Ethoca’s capabilities and combine them with its own cybersecurity protocols, data insights, and AI-powered solutions to help fight e-commerce fraud. The press release noted a report from Juniper Research that indicated that retailers anticipate losing $130 billion over the next five years due to online fraud.
“Ethoca is a strong addition to our multilayered cyber strategy, helping customers take immediate action against fraud and eliminate chargebacks before they can occur,” Mastercard president of cyber and intelligence solutions Ajay Bhalla said. “In turn, consumers are provided with a better checkout experience every time they shop at a participating site.”
Ethoca demonstrated its Ethoca Alerts solution at FinovateEurope 2016. Founded in 2005, and headquartered in Toronto, Ontario, Canada, the company partnered with French payment system Cartes Bancaires in December. In October, Ethoca teamed up with American Express to help merchants better communicate with AMEX Customer Care during service calls.
With investors including Pivot Investment Partners, Spectrum Equity, and Difference Capital, Ethoca had raised $45 million in funding prior to today’s acquisition announcement.