Over $10 billion is wasted every year due to fraudulent e-commerce charges and that number is growing. This is not only costly and time-consuming for the businesses, but also the credit card companies and customers.
But now there are several startups including Signifyd that believe they can use technology to cut down on some of this fraud before it occurs. Another is CashShield, which has been building a big business out of Singapore and counts clients like Alibaba and Razer.
Bootstrapped and profitable, CashShield is raising its first round of funding since it was founded in 2008. The $5.5 million was led by GGV Capital, with participation from Nest co-founder and iPod creator Tony Fadell.
Fadell provided the following statement to TechCrunch. “CashShield is at the forefront of fraud reduction through machine learning that best’s all current technologies on the market by an order of magnitude. It’s the only company in the sector with a Wall Street-style, high-frequency trading approach to weighing fraud risk for companies, and it’s clear that their technology will be in demand by many industries.”
Jenny Lee, managing partner at GGV Capital, said she invested because “CashShield solves a problem that has international scalability. Any transaction – ecommerce, gaming, medical – is subject to fraud.”
Its business model works by charging customers for every transaction that they’ve been sent to validate, instead of per subscription. CashShield could not share its revenue, but it’s on track to process more than $1 billion in GMV this year.
The new funding will help CashShield expand to Silicon Valley. CEO Justin Lie said he now wants to use CashShield’s technology for social media account verification as well. He believes that CashShield can help combat “fake news” or misleading information that is sometimes shared by hacked accounts.