A Chicago startup just raised $2.6 million to connect banks and merchants in the fight against fraud.
Rippleshot, a Catapult-based fraud analytics startup, announced it raised $2.6 million on Wednesday. Chicago-based KDWC led the round, which also included participation from CMFG Ventures, the venture capital entity of CUNA Mutual Group. Canh Tran, cofounder and CEO of Rippleshot, said the new funding will go toward hiring developers and data scientists to support their continued work with banks and credit unions, as well as an expansion into the merchant fraud detection space.
Rippleshot works with banks, credit unions, and data processors to reduce credit card and debit card fraud among customers. They offer a cloud-based platform that uses data analytics and machine learning to detect a breach of card data, identify which customer's card is most likely to have seen fraudulent activity, and suggest strategies to prevent future fraud loss. For example, if they find a customer has been to several stores or shopped online where fraud has been reported, it means their card is more likely to be used for fraudulent activity.
Already Rippleshot has made inroads with the banking, credit union and data processing industry, Tran said. Currently Rippleshot works with two large payment processors and several of their banks and credit unions with a total reach of over 5,000 banks. The startup was endorsed by the American Banking Association, and was named to H2 Ventures and KPMG's Fintech 100 report. He noted that CUNA Mutual Group, whose VC arm participated in this round, works with 9,000 credit unions.
With their most recent funding, they're looking to bridge the fraud gap between banks and merchants. Previously both banks and merchants have closely guarded their data, largely for proprietary reasons, leading to siloed fraud solutions. Rippleshot is aiming to combine this data to provide a solution for merchants that can proactively alert retailers when a card is likely being used for fraud. They've been talking with merchants for the past six months, Tran said, and they're aiming to deploy their solution in Q2 of this year.
"We believe if we have both sets of data we can provide a better solution for both parties," said Tran.
Currently Rippleshot has 10 employees, and while Tran said they aim to stay lean, he anticipates they could hire 10 to 20 new employees depending on new business growth. Along with the raise, Rippleshot announced that Gloria Colgan will join its advisory board. Colgan was previously president of PYMNTS.com, and was a senior executive at Discover Financial Services and JPMorgan Chase.
