In an effort to step up its security for digital commerce fraud, Mastercard has acquired Toronto-based company Ethoca.
Ethoca uses collaboration-based technology to bring together card issuers, ecommerce merchants, and online businesses to increase card acceptance, reduce fraud, recover lost revenue, and eliminate chargebacks; bringing to the table a network of more than 5,000 merchants and 4,000 financial institutions.
By setting up a network that provides near real-time information when a fraudulent transaction is detected, Ethoca allows retailers to cancel the delivery or transaction; which it says will reduce operational costs by eliminating chargebacks.
According to data from Juniper Research, retailers are expected to lose $130 billion due to fraud over the next five years. As well, research from the Aite Group surmises that false declines – when a transaction from a trustworthy customer is declined by the card issuer due to a perceived risk of fraud – cost the ecommerce industry in the U.S. $331 billion USD in 2018 alone.
Along with the added security against fraud, Mastercard says it intends to integrate the services that Ethoca provides with its current security activities, data insights, and artificial intelligence solutions; thus further empowering both the customer and the vendor to prevent fraudulent charges and improve the user experience as a whole.
“Advancements in technology are enabling us to transform the experience for our customers,” said Ajay Bhalla, president of cyber and intelligence solutions for Mastercard. “Ethoca is a strong addition to our multilayered cyber strategy, helping customers take immediate action against fraud and eliminate chargebacks before they can occur. In turn, consumers are provided with a better checkout experience every time they shop at a participating site.”
The terms of the acquisition have not yet been disclosed; although the transaction is expected to be finalized in the second quarter of 2019.