E-Commerce’s Cure for Chargebacks

SIGNIFYD is a full-service payment validation platform to help online businesses prevent payment fraud. They use data from thousands of risk indicators to determine if transactions are fraudulent. SIGNIFYD’s goal is to make an impact with e-commerce companies by allowing faster approvals for good transactions, thus building loyalty with high-valued customers, while also reducing the number of chargebacks, reducing manual reviews and increasing sales (clients include HSN and Wayfair). They capture value through annual Untitled 2premium membership and guaranteed payment transactions, offering client companies tiered pricing. Additionally, SIGNIFYD offers a ‘free, no-risk, 14 day trial’ to get clients to try the service.

First to Incorporate Social Graph in Risk Indicators

SIGNIFYD first gained attention as a result of major product differentiation. They were the first company to use social graph data to correctly identify fraudulent transactions in real-time. This was revolutionary for the e-commerce industry at the time and the innovative use of data was recognized by the Merchant Risk Council when the company received the Emerging Technology Award for ‘Most Innovative Startup’ in 2013.

The company incorporated social graph data from Facebook, LinkedIn, Twitter, Klout and others with other forms of risk indicators to determine the level of risk associated with e-commerce transactions. Specifically, SIGNIFYD assigned ‘social scores’ for consumers that could be associated with each transaction.

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Transaction Verification Speed

SIGNIFYD uses multiple data sources to determine best decision for fraud protection. In addition to social graphs, they use risk indicators such as device fingerprint, customer history, IP-geo location data, cross merchant blacklists, transaction velocity and public records. The data system quickly scans these risk indicators and then concludes whether a transaction is ‘good’ or ‘bad.’

The client company can see SIGNIFYD recommendation, in addition to a detailed case summary to better inform the ultimate decision. Furthermore, you are able to set up alerts so you can quickly determine risky transactions.

Guaranteed Payments

While the SIGNIFYD service offers the client company real-time information to make a better informed decisions about a transaction, they also offer a guaranteed payment option. If a transaction gets a chargeback, SIGNIFYD will cover 100% of the guaranteed transaction at no charge. This means the client company only pays a fee when the transaction is approved and they have 3 options for determining the level of the guaranteed payment. 1) Guarantee all transactions, essentially letting SIGNIFY handle the entire review process (for a 1% fee of the approved transaction). 2) Guarantee only international transactions (for a 2% fee). 3) Guarantee only select transactions, giving the company the most flexibility and control to decide what transactions need to be guaranteed (for a 4% fee).

Future

Competitors have the ability to incorporate new layers of data onto their own technologies, therefore starting to do their own version of social graph data integration. How can SIGNIFYD differentiate after this product differentiation become mainstream?

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