Online Fraud Prevention Startup Riskified Looks to Kill the Chargeback

The growing risk of security compromises and chargebacks that comes from an increasingly online economy has hit online merchants and sellers hard.

The average web merchant loses one percent on chargeback from fraudulent transactions.

Riskified, a Tel-Aviv-based company is hoping to ease the fears (and losses) of these online merchants.

It’s now offering its Shop Protection service for 0.7 percent of approved transactions, slashing its previous 1.4 percent rate, and new merchants can get the first $50,000 in sales screened for free.

Riskified’s Shop Protection service is a risk management solution that works to review and approve of transactions by utilizing a global fraud prevention network which includes proxy server detection and behavioral models to screen for markers of potentially fraudulent transactions.

A seller can elect to send a portion or all transactions to Riskified for approval. The chargeback risk is then handed off to Riskified.

Riskified reports a transaction approval rate of 99 percent, and reports that it can approve of up to 74 percent of transactions that might normally be declined.

According to Eido Gal, CEO and Cofounder of Riskified, there are three main problems that his company solves.

When a chargeback occurs, a merchant not only loses out on the shipped product, they also incur a chargeback fee.

The second is lost sales from false positive declines, which amounts “close to 80 percent.”

Finally, Riskified can give merchants “complete control over what he sends to us,” including the declined transactions to recoup lost sales. Gal says that on average, Riskified can approve of 74 percent of transactions that would normally have been declined.

Merchants aren’t the only ones who have seen Riskified’s value. The company recently received $4 million in Series A funding in February.