With $640M Deal, Equifax ‘Kounts’ The Ways To Combat Online Fraud
The great digital shift – and the rising tide of eCommerce – has placed greater pressure on companies to verify their customers and guard against account takeovers.
To that end, late last week Equifax said it had reached a deal to acquire fraud prevention and digital ID firm Kount for $640 million.
As reported, the deal will enable Equifax to boost its global presence in digital ID and fraud prevention, including through the Kount Identity Trust Global Network. That network, in combination with Equifax, will use advanced technologies to connect data “signals” that stem from 32 billion online interactions, five billion annual transactions and 17 billion unique devices across the globe, as the company said in its announcement tied to the acquisition.
The deal is anticipated to close in Q1 of 2021.
In a Monday (Jan. 11) call with investors to discuss the acquisition, Equifax CEO Mark Begor, Equifax CFO John Gamble, and Sid Singh, president of Equifax’s United States Information Solutions (USIS), said the deal cements the artificial intelligence (AI)-driven fraud defenses that are vital in an eCommerce market worth trillions of dollars across the globe.
On a company-wide basis, Begor said the announcement “is an important strategic step for Equifax as we accelerate the growth of our identity and fraud business.”
Equifax has estimated that the total addressable market for the combined firm is worth $35 billion annually (via the total fraud risk and authentication markets), and that the deal could add as much as 150 basis points to Equifax’s growth rate. The Kount offerings will be integrated into the Equifax Luminate fraud platform, according to last week’s announcement.
The January announcement follows the July announcement that Equifax had purchased Ansonia Credit Data, a commercial credit data firm. The price was not disclosed for the acquisition. Under the terms of the deal, Ansonia will be integrated into PayNet, a division of Equifax that provides credit and analytics for small and medium-sized businesses (SMBs), as part of Equifax’s USIS business unit.
Looking at the Numbers
As detailed in presentation materials, Kount had more than $60 million in annualized revenues, which are marked by annual growth rates in excess of 20 percent. Direct partners represent two-thirds of revenues; integrated partners comprise the remaining one-third of Kount’s top line.
The growth comes as eCommerce activity was up more than 20 percent in 2020 and online banking soared more than 67 percent. At the same time, online card fraud was measured at $6 billion. Separately, PYMNTS has estimated that, amid the pandemic, consumers are roughly 105 percent more likely to shop digitally than they were a year ago.
As many as 30 percent of merchants reported an issue with chargeback fraud, according to the Equifax/Kount call. Customers using Kount – where management noted on the call that data are proprietary – report 90 percent reduction in chargebacks and 70 percent reductions in false positives.
In terms of mechanics, management said that retailers would work with Kount to develop specific transaction rules tied to their businesses. Analysts on teams that sit “within” those retailers will conduct case-specific reviews, where holistic data collection across shipping addresses, device IDs, IP addresses and other information can be used to combat fraud.