Mastercard announced this week that it has entered into a definitive agreement to acquire Ethoca, a Toronto-based digital commerce fraud solutions provider.
Ethoca’s model seeks to reduce chargebacks by increasing information sharing between e-commerce merchants and credit-card issuing banks. Because many consumers go straight to their credit card companies when there is a charge on their statement they don’t recognize, merchants often are presented with a chargeback when they could have issued a less costly refund instead.
The acquisition, Mastercard said, will enable the card network to stop more fraud while its merchants can accept more online transactions and both merchants and issuers reduce costs associated with chargebacks.
“Advancements in technology are enabling us to transform the experience for our customers,” said Ajay Bhalla, president of cyber and intelligence solutions for Mastercard, in the press release.
“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.”
Given increasing attention on friendly fraud and its impact on merchants and issuers, it’s no surprise Mastercard is augmenting its fraud detection capabilities and taking action to reduce chargebacks.
“Mastercard is a natural home for Ethoca,” said Andre Edelbrock, CEO of Ethoca. “For more than a decade, we’ve connected e-commerce businesses with banks to make the payments system simpler and more secure. We are excited to have the opportunity to bring our services to more places and people, ultimately contributing to the best possible online payment experience.”
Financial terms of the acquisition were not disclosed.