Signifyd, a fraud prevention software founded by PayPal vets has raised $2 million Andreessen Horowitz, Data Collective, IA Ventures, QED Investors (Capital One founder Nigel Morris), Resolute.VC, Tekton Ventures, and other angel investors.
Signifyd was founded un 2011 by a team of risk expert from PayPal to figure out the complexity of payment validation and help online businesses mitigate risk when it comes to fruad. The startup says that the average e-‐commerce
retailer loses 3.1% to fraud every year. In fact, large e-commerce companies have actual teams of people that try to work on matching the online identity of a customer with the real-life person he or she claims to be. Signifyd has basically built a technology that helps cut the amount of time needed to figure out whether a payment is fraudulent.
Raj Ramanand, co-‐founder and CEO of the company, explains that Signifyd’s SaaS simply sits on tops of existing payment structures and processors, and pulls together data to screen the transaction. The product uses algorithms on back end to see if every transaction is legitimate and had different systems in place for various types and sizes of retailers.
Signifyd’s product is built on a relationship graph that reveals and scores hidden connections. By evaluating and scoring data from various sources such as social, geo, address, phone, names, airports, cards and more, Signifyd simplifies the decision making process for a manual review agent.
Ramanand explains that the kind of real-time information Signifyd delves into is comparing emails of customers with those on black lists of fraudsters, evaluating how many times a card has been used in the past hour, and matching online identities with offline personas. The startup’s technology will do name, address, and phone checks, look at the device’s geolocation, and more. “We want to grow with Stripe’s and Braintree’s of the world,” he says.
Already, Signifyd has been used in beta testing with online retailers and has cut the amount of time spent on manually reviewing transactions by 60% in some cases while increasing catch rate by 20% or more. The company has also seen lifts in chargeback detection and a reduced number of declines because of the matching og social profile data. The startup says trials are also underway with collaborative consumption marketplaces.
Online fraud is a big problem, and as more and more people flock to the web to purchase items, there needs to be better fraud management systems in place. Using data, and non-uniform data such as social data, is a compelling take on payments validation and fraud prevention. And the team behind Signifyd clearly has experience in the online payments world.