2021 Sees Tremendous Growth in the Fraud Prevention Industry

Last Updated on June 21, 2022 by

During the first 10 months of 2021 the fraud prevention industry has seen tremendous growth. This reflects in the sheer number of Acquisitions, Raised Capital and IPO’s. Much of that can be attributed to the explosive growth of the ecommerce industry as a whole. As more and more consumers turn to buying online via CNP transactions, so does the need for merchants to protect themselves from ecommerce fraud.

Companies that raised funds in 2021 – almost $1.6 billion dollars raised from venture capital this year alone

1. Sift, a digital trust and safety platform, raised $50M at a $1B Valuation to help merchants and online business combat.
2. FRISS, which develops fraud protection solutions for insurers worldwide, raises $65M for AI-powered end-to-end fraud prevention and detection solutions for P&C insurers worldwide from Accel-KKR ventures.
3. Forter, which works to assess the trustworthiness of every customer interaction, in real-time, raises a giant $300M series F funding round at a $3B valuation six months after a $125M Series E round.
4. Tel-Aviv based nSure AI, which offers advanced auto-ML models to merchants to help them fight fraud, raises $6.8M in a seed round.
5. Feedzai, a cloud platform to manage financial risk using AI and Machine Learning technologies, raises $200M Series D round at a $1B valuation.
6. Jumio, an ID Authentication platform that specializes in online mobile payments and identity verification and provides card and ID scanning and validation products for mobile and web transactions, raises $150M to further expand its platform.
7. Trulioo, a Canadian-based company that provides KYC electronic identity and address verification of both individuals and businesses, raises a massive $394M round at a $1.75B valuation.
8. SentiLink, San-Francisco based ‘Know Your Customer’ identity verification platform aimed at detecting synthetic identities, raises $70M series B round.
9. SEON, which focuses on developing a fraud prevention system that can easily be integrated at any online point of authentication, raises $12M Series A round.
10. Identiq, Israel based, identity authentication solution, raises $47M in series A round.
11. Signifyd, which offers revenue protection, abuse prevention & payment compliance solutions to merchants, raises $205M series E Funding.
12. Fraudio, a payment and AML fraud solution for online merchants, raises $3.3M in seed funding.
13. Arkos Labs, a fraud and policy abuse prevention platform, raises $70M in Series C funding led by SoftBank.

Companies that were acquired in the fraud prevention industry for over $6.4 Billion

1. Ekata a Fraud Prevention platform Acquired by MasterCard for $850M – This is not the first fraud prevention solution MasterCard has acquired. Back in 2019 MasterCard acquired Toronto-based Ethoca, a global provider of technology solutions that help merchants and card issuers collaborate in real-time to quickly identify and resolve fraud in digital commerce.
2. Kount, another leading ecommerce fraud prevention platform acquired by Equifax for $650M.
3. TransUnion Acquires Neustar for a monster $3.1 billion in Cash – To further bolster its Identity Authentication and Fraud Prevention portfolio
4. Sift Acquires Chargebacks to further enhance its unified fraud prevention platform for merchants. The financial details of the acquisition were undisclosed.
5. SecuredTouch, a behavioral biometrics startup from Israel (bot attack prevention, identity risk, and fraud intelligence), was acquired by the Denver-based multi-national Ping Identity for an Undisclosed amount.
6. On the heels of its Kount acquisition (see #2) Equifax acquires Appriss Insights, a risk intelligence solution, for $1.825 billion. This is brings Equifax’s total acquisition spree in the fraud prevention industry to nearly $2.5 billion.
7. Stripe to acquire card authentication startup Bouncer to integrate with its native Radar Fraud Protection solution. 

Companies that went public

1. Riskified IPO’s on the NYSE for $4.4 Billion Valuation.  Riskified, which was founded in 2013 in Israel specializes in CNP fraud protection solutions for enterprise ecommerce merchants.  It pioneered the Chargeback Guarantee model and counts several of the largest merchants in the world as its customers.
2. ClearSale IPO’s on the Brazil stock market at a $880 Million Valuation. ClearSale, founded in Brazil in 2001 helps ecommerce merchants detect fraudulent transaction using machine learning and human review.

What is driving mergers and acquisitions in the fraud prevention industry?

The explosion in not only fraud volume but different fraud types and evolving payment landscape is driving fundamental change to the industry’s business model. Ecommerce fraud prevention is no longer just about chargebacks. Cryptocurrency, content fraud, account takeovers, return fraud, and more present new, sophisticated challenges and potential weak spots for fraudsters to exploit. Fraud is now (rightly) seen as an end-to-end customer experience issue, not just a payments issue. Boutique companies specializing in one or the other of the problems along the purchasing journey have blind spots that made consolidation inevitable.

Looking forward, we expect more acquisitions and IPOs as the sector and technology continue to mature. Opportunity attracts investment, and so we also expect to see significant amounts of venture capital flowing into companies within the industry, bolstering investor confidence in the technologies and its benefits to merchants, payment providers, and other fintech companies.

~The Editorial Board