Mastercard to acquire Ireland domiciled Ethoca Solutions

CPE Media News (3/12/2019) – Mastercard Incorporated (NYSE: MA) has entered into an agreement to acquire Ethoca Solutions from founder Andre Edelbrock, Spectrum Equity, Pivot Investment Partners, Difference Capital Financial Inc. (TSX: DCF) and company employees.

Financial terms were not disclosed. The transaction is expected to close in Q2 2019.

Toronto based Ethoca, a Dublin, Ireland registered company, is a global provider of technology solutions that help merchants and card issuers collaborate in real-time to quickly identify and resolve fraud in digital commerce.

The Ethoca suite of products adds to Mastercard’s commitment to drive greater protection in the digital space, integrating with its robust suite of fraud management and security products.

Backed by private investors, Ethoca completed a US $45 million primary and secondary equity offering led by Spectrum Equity in July 2015. As part of the transaction, Christopher Mitchell, Spectrum Equity Managing Director, joined Larry Klane, co-founding principal at Pivot Investment Partners, on Ethoca’s board of directors.

Difference Capital acquired its stake in Ethoca by way of secondary purchase in December 2012. As of September 30, 2018, Difference Capital reported an investment cost of $1.51 million in Ethoca. Difference Capital said the transaction will impact its NAV by approximately $6.5 million.

photo credit: Ethoca

News Release

Mastercard Acquires Ethoca to Reduce Digital Commerce Fraud
Tuesday, March 12, 2019

PURCHASE, N.Y. – Mastercard (NYSE: MA) today announced it has entered into an agreement to acquire Ethoca, a global provider of technology solutions that help merchants and card issuers collaborate in real-time to quickly identify and resolve fraud in digital commerce.

The Ethoca suite of products adds to Mastercard’s commitment to drive greater protection in the digital space, integrating with its robust suite of fraud management and security products.

Today, the Ethoca network brings together more than 5,000 merchants and 4,000 financial institutions around the world. When a fraudulent transaction is identified, near real-time information is sent to the merchant so they can confirm the transaction, stop delivery or reverse the transaction to avoid the chargeback process. As a result, both merchants and card issuers benefit from lower operational costs by reducing fraud at the source.

Mastercard intends to further scale these capabilities and combine Ethoca with its current security activities, data insights and artificial intelligence solutions to help merchants and card issuers more easily identify and stop potentially fraudulent purchases and false declines.

“Advancements in technology are enabling us to transform the experience for our customers,” said Ajay Bhalla, president of cyber and intelligence solutions for Mastercard. “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.”

According to Juniper Research, retailers are expected to lose $130 billion in online fraud over the next five years. In addition, research firm Aite Group estimates that false declines – when card issuers decline transactions from good customers due to a perceived fraud risk – cost the industry $331 billion in 2018 in the U.S. alone.

“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.”

Terms of the agreement were not disclosed and the transaction is anticipated to close in the second quarter of 2019.

About Mastercard
Mastercard (NYSE: MA), www.mastercard.com, is a technology company in the global payments industry. Our global payments processing network connects consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. Mastercard products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter @MastercardNews, join the discussion on the Beyond the Transaction Blog and subscribe for the latest news on the Engagement Bureau.

About Ethoca
Ethoca is the leading, global provider of collaboration-based technology that enables card issuers, ecommerce merchants and online businesses to increase card acceptance, stop more fraud, recover lost revenue and eliminate chargebacks from both fraud and customer service disputes. Through the Ethoca Network – the first and only of its kind in the industry – we are closing the information gap between card issuers and merchants. This unique capability makes fraud and customer dispute insight available and actionable in real time.

Our suite of services delivers significant revenue growth and cost saving opportunities to more than 5,400 merchants in 40+ countries and more than 4,000 card issuers in 20+ countries. Eight of the top ten North American ecommerce brands, 14 of the top 20 North American card issuers and six of the top ten UK card issuers rely on Ethoca solutions and the network that powers them.

Contact:
Julia Monti
Julia.monti@mastercard.com
914-217-9533

CPE Media News

Private Capital Journal provides Canada's only complete private capital (angel, venture capital, private equity, private/exempt), public financing, M&A, IPO/RTO news and intelligence.