Mastercard is putting another payments fraud management firm in its shopping cart. This would be its just-announced plan to acquire Toronto-based Ethoca. This follows Mastercard’s 2017 acquisition of NuData Security. As the following Cape Breton Post reports, the buyout is expected to close by June.
Mastercard says it will acquire Toronto-based fintech Ethoca, which helps merchants and card issuers collaborate to identify and resolve fraud in digital commerce.
The global payment processing company did not disclose the terms of the deal, which it expects to close during the second quarter of this year.
Through Ethoca’s technology, when a fraudulent transaction is identified, information is sent to merchants to enable them to confirm the transaction, stop delivery or reverse it to avoid a chargeback, which is the return of funds to the customer.
Ethoca says its network connects roughly 5,000 merchants with 4,000 financial institutions.
Ajay Bhalla, Mastercard’s president of cyber and intelligence solutions, says Ethoca is a “strong addition” to its cyber strategy and the payments company plans to further scale the fintech’s capabilities.
Mastercard has made several security-focused acquisitions in recent years, including a deal to acquire Vancouver-based fintech NuData Security announced in March 2017.
This is not a surprising development, as Mercator has been saying for a while that payments fraud tech firms represent excellent buyout candidates. Firms like Ethoca have proven fraud detection technology and a client base that is ready-to-go. They are typically privately held and comparatively smaller in size that makes for a highly manageable acquisition. The only surprise is that more firms like this have not been bought out. But don’t wait too long—as there are many other takeover targets waiting out there. Just go to Merchant Risk Conference next week March 19th-21st, and walk the exhibit floor to see the possibilities. Mercator will be there as well if you would like to connect.
Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group