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Fraud Prevention Software Firm Riskified Explores Sale

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Riskified, a New York-based company specializing in fraud prevention software for e-commerce, is exploring strategic options, including a potential sale, after attracting interest from multiple parties, according to sources familiar with the matter. The company, originally founded in Israel, is working with investment bank Qatalyst Partners to evaluate takeover approaches, with discussions remaining in the early stages.

Potential buyers for Riskified include digital payment processing firms, online shopping platforms, cybersecurity companies, and private equity firms. However, the sources cautioned that a deal is not assured. Following the news, Riskified’s stock price rebounded, surging nearly 9% on Wednesday.

Riskified, which went public nearly four years ago through an initial public offering, is currently valued at around $860 million. The company has faced significant challenges, with its stock plummeting more than 80% from its peak in September 2021 to its close on Tuesday. Despite its success in providing fraud prevention software for retailers, Riskified has not been profitable since its shares began trading.

For the quarter ending December 31, the company reported a widened net loss of $4.1 million, compared to a loss of $3.3 million in the previous year. This financial setback was partially attributed to the loss of several large customers in some of its key sectors.

Founded in 2013, Riskified provides fraud prevention services to e-commerce businesses, helping retailers protect digital transactions from fraudsters. Notable clients include luxury fashion brand Prada, online travel platform Booking.com, and jewelry brand Swarovski.

India Central Bank Governor Issues Warning on Rising Digital Frauds, Announces Secure Domain Names

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India’s central bank governor, Sanjay Malhotra, issued a cautionary note on Friday, urging lenders to address the increasing incidence of digital payment frauds. Malhotra highlighted the concern that cyber attacks, data breaches, and other digital threats are on the rise as both Indian banks and consumers adopt newer technologies. He also noted that the Reserve Bank of India (RBI) would soon introduce secure website domain names to counter fraudulent practices.

Fraudsters often exploit subtle differences in domain names to deceive users, tricking them into sharing sensitive information or making fraudulent transactions. In response, the RBI is introducing two exclusive internet domain names. Banks will be allocated the ‘bank.in’ domain, while non-bank financial entities will receive the ‘fin.in’ domain. This initiative aims to enhance online security by establishing a unique identity for each entity, making it easier for consumers to recognize legitimate platforms.

The Institute for Development and Research in Banking Technology (IDRBT) will serve as the exclusive registrar for these domain names, with registration set to begin in April 2025.

 

PayPal’s Profit Growth Focus Slows Unbranded Business, Shares Drop 10%

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PayPal’s shares fell nearly 10% on Tuesday after the digital payments giant reported a sharp slowdown in its unbranded card processing business growth and a shrinkage in its operating margin during the fourth quarter. The company’s unbranded payments, which involve transactions for other firms rather than PayPal itself, had experienced strong growth in recent years but traditionally operated on low margins due to intense competition.

Under CEO Alex Chriss, PayPal has focused on “profitable growth” and revamped its pricing strategy, particularly for its Braintree product (the non-PayPal branded checkout service), which has led to some customer losses. In the fourth quarter, total payment volume growth for unbranded payment processing slowed to just 2%, a significant drop from 29% the previous year. Despite this, the focus on profitable growth has improved overall profitability.

Branded product growth, which includes services like Venmo where consumers and merchants interact within PayPal’s platform, also fell short of analysts’ expectations, increasing by only 6%, below the expected 7%. This outcome overshadowed an optimistic forecast for 2025 profit growth that surpassed Wall Street estimates.

The results come amid increasing competition in the digital payments space, with technology giants like Apple and Google, along with traditional card networks like Visa and Mastercard, expanding into PayPal’s core market. This competition has intensified as more consumers turn to mobile payment options such as Google Pay and Apple Pay.

Despite a contraction in adjusted operating margins by 34 basis points to 18% in Q4, PayPal’s shift towards high-margin products helped the company close the year with an expansion in margins, rising 116 basis points to 18.4%.

CEO Chriss, who took over in late 2023, emphasized the company’s commitment to focusing on high-margin products and optimizing its offerings for better profitability. PayPal’s new initiatives include a “one-click” checkout feature called Fastlane and forming new partnerships to strengthen its market position.

Looking ahead, PayPal expects its adjusted profit for the full year to grow between $4.95 and $5.10 per share, surpassing Wall Street’s estimated $4.90 per share. The company reported an adjusted profit of $1.19 for the fourth quarter, exceeding estimates of $1.12. Its revenue for Q4 rose by 4% to $8.4 billion, and total payment volume increased by 7%.