Worldpay acquires fraud detection tech firm Ravelin

With payment companies under pressure to find new lines of business beyond transaction processing, fraud detection has become a major value-add. Worldpay is addressing that trend by agreeing to acquire fraud prevention tech provider Ravelin.

Ravelin sells fraud prediction to e-commerce merchants, using a cloud-hosted AI platform to analyze payment data, spotting threads such as payment fraud, account theft, marketing promotion abuse and refund theft. Ravelin also offers 3D Secure authentication, a form of two-factor authentication for e-commerce payments.

Terms of the deal, which is expected to close early this year, were not disclosed. Bank technology vendor FIS spun off Worldpay in 2023 following a high-profile deal in 2019 in which FIS acquired the longtime payment processor, enabling FIS to sell payment technology to both card issuers and merchants. FIS rival Fiserv acquired First Data in a similar deal, also in 2019.

Following the 2023 split, FIS retained a 45% stake in Worldpay, which was taken private by the private equity firm GTCR. The FIS/Worldpay separation was seen as a way for both firms to speed technology development in their own specific niches and free up capital to make acquisitions.

Firms like Worldpay, which has its roots in enabling merchants to support payments, in recent years have been squeezed by technology firms such as Stripe and Block, which offer digital payments and other merchant services. By acquiring Ravelin, Worldpay can expand its reach into e-commerce and add more AI-powered technology.

"For merchants, using AI powered fraud prevention solutions significantly improves the user experience and customer retention. The acquisition of Ravelin enhances Worldpay's existing AI capabilities and portfolio of value-add services," said Wordpay in an email. "Additionally, augmented AI-powered data analytics will unlock valuable insights, enabling merchants to make more informed business decisions."

Worldpay's scale and reach, including processing approximately $2.5 trillion in payments volume and more than 50 billion transactions in 2024, will be an immense asset, said Martin Sweeney, co-founder and CEO of Ravelin, in a release.

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Other companies that have traditionally focused on merchant payment systems and money movement hardware, such as Diebold Nixdorf, Ingenico and NCR, have invested heavily in recent years to broaden the products they can sell to merchants as the margins for fees from payment processing narrow. And payment companies such as PayPal and the major card networks have also made value-add services part of their product diversification strategies.

By investing in AI and fraud detection, Worldpay is addressing two major areas of concern in the broader financial services industry. Improving security and fraud mitigation are top technology investment priorities in the banking industry, according to research from American Banker, which reports that 56% of bank executives said these issues are the most important for technology investment.

AI and machine learning also ranked high, with 40% of bank executives saying these were also among their top priorities. "Helping merchants manage fraud has always been a big part of the value proposition of merchant service providers, such as Worldpay," said Zil Bareisis, a senior analyst at Celent. With fraud vectors becoming more complex, and fraudsters getting more sophisticated, it's critical to deploy the latest tools and technologies, such as AI, so that merchants could stay a step ahead."