Helping e-commerce with those pesky chargebacks

ecommerce sales
Credit: MVCOSHOP

It has a far broader story, but even the simplest of use cases for Signifyd makes total sense.

In the past I've been involved with e-commerce businesses and have felt, firsthand, the pain caused by chargebacks. For anyone not in the e-commerce space, the chargeback concept might sound foreign. Essentially what it means is that if a fraudulent credit card transaction is disputed by the true cardholder, the vendor that made the charge has the funds reversed. Which sucks if the physical or virtual goods have already been sent -- the vendor is down the goods, and doesn't have the payment.

So it was exciting to hear about what Signifyd is doing for this problem area. The company is all about risk assessment. What it does behind the scenes is to apply analytics to more accurately assess the risk around e-commerce transactions. What that means for the actual merchants is that Signifyd can offer a 100% financial guarantee against chargebacks.

When you consider that e-commerce fraud has a $9 billion net cost and a $120 billion cost in lost revenue per year, you understand that this is an important offering. The existing solutions offer a risk score and rely, to an extent, on human assessment to decide whether or not to accept a transaction. Now, using machine learning and behavioral analytics, the process can be automated.

Signifyd is bucking the trend of difficult financing and announcing a $20 million Series B round led by Menlo Ventures. Alongside Menlo, Signifyd had participation from Allegis Capital, IA Ventures, QED Investors, Bill McKiernan and Tim Eades. The company had a stellar 2015, showing 8 times year-on-year revenue growth and signing up big names such as Lacoste, Peet's Coffee, Shane Co. and Jet.com.

But e-commerce would seem to be just a first step for this company. "We're saving our customers millions of dollars in revenue and merchants of all sizes are taking note," said Signifyd co-founder and CEO Rajesh Ramanand. "We raised our Series A just seven months ago and our traction has been tremendous. What's more, we believe the technology we're applying to e-commerce is the technical foundation for the next generation of insurance products."

This looks like a really valuable offering for anyone in the e-commerce space and should remove lots of the pain that these merchants feel.

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