Payments solution company Razorpay said on Monday that it has acquired Thirdwatch, a company that specialise in big data and machine learning for real-time fraud prevention, for an undisclosed amount.
The Gurgaon-based data science company by applying AI to fight fraud at scale has boosted Razorpay’s quest to build and introduce innovative technological solutions to facilitate the transformation of the Indian economy from a cash-driven infrastructure to a less-cash ecosystem. Thirdwatch, now a wholly-owned subsidiary of Razorpay, will be based at the company’s headquarters in Bengaluru.
“This acquisition is a perfect fit. Our war is against cash, hence we want to address all problems surrounding it through new integrated data science technologies,” said Harshil Mathur, chief executive and Co-Founder of Razorpay. “Fraud has been the albatross around e-commerce companies' necks for the longest time and we believe through this acquisition we will empower businesses across industries to digitally transform and disrupt, by improving their response and redressal mechanisms of combating fraud.”
Razorpay said considering the changing landscape, the role of fraud has been significantly underrated in economic analysis. Estimates suggest that by FY’22, the Indian e-commerce industry is expected to reach $150 billion. With around 4-5 per cent transactions being fraudulent, Indian e-commerce players will lose over $5 billion to fraudulent transactions by 2020.
Razorpay and Thirdwatch envision a future where AI will help e-commerce firms not just combat fraud but maintain a competitive advantage and significantly improve merchant profitability. “Together, I believe we can help reduce frauds by 30-40 per cent by next year,” said Mathur.
Shashank Agarwal, founder of Thirdwatch said fraud has been one of the largest and longest concerns for e-commerce companies. He said most of their systems frequently fail while identifying fraudulent patterns and therefore not capable of differentiating between genuine customers and fraudsters. “There is a dire need for a data-driven solution to help identify these patterns and reduce losses of any kind, to help the marketplace function at an optimal level,” said Agarwal. “We hope to make AI accessible and helpful to every business, amplifying human gumption with intelligent technology.”
Considering the pace at which digital adoption in the country is increasing, with digital transactions growing 50 per cent year-on-year, the problem is becoming even bigger.
Razorpay, which in June this year raised funding of $75 million from investors including Sequoia and Tiger Global, currently powers digital payments for 3,50,000 businesses like IRCTC, Airtel, BookMyShow, Zomato, Swiggy and Yatra. It plans to increase this to 450,000 by 2020. The company expects a 5x growth in its revenue by the end of the next fiscal year.