VISA has signed an agreement to acquire real-time artificial intelligence (AI) payments protection company Featurespace, marking the credit-card giant’s latest move in bolstering its fraud and financial crime risk detection portfolio.
The terms of the arrangement were not disclosed.
Founded in 2008, and headquartered in Cambridge, UK, the private company develops algorithmic-based software to analyse transaction data and detect fraud. In addition to Visa, Featurespaces’ clients include HSBC, NatWest Group and payment solutions provider TSYS.
The demand for companies like Featurespace has surged due to the rise in more sophisticated financial scams, many of which are powered by generative AI.
In the second quarter of 2024, there were 284,000 reported cases of identity theft and nearly 111,000 cases of credit card fraud, indicated a recent report by the US Federal Trade Commission.
Payments companies are catching on. In March, Visa added three new AI-powered fraud-prevention tools to its suite of products for business clients, and said the company helped block 80 million fraudulent transactions worth US$40 billion in 2023.
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This was nearly double the total in the previous 12 months. Earlier this month, Mastercard also announced the acquisition of global threat intelligence company Recorded Future for US$2.6 billion.
The demand for fighting fraud through AI is on the consumer side as well.
A 2023 Fair Isaac Corporation survey showed that 77 per cent of customers expected financial institutions to use AI for better fraud prevention, showing the increasing demand for more advanced security measures.
“With Visa, we can bring the innovation, integrity and purpose of our platform and our team to more payment service providers and ultimately, stop more people from becoming victims of financial crime,” Dave Excell, founder of Featurespace, said. BLOOMBERG
