Transaction Security

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Executive Summary Overview <strong>Transaction</strong> security has emerged as one of the fastest growing subsegments of Financial Technology benefiting from both the rapid growth in e-commerce and the increasing demand for smarter authentication and fraud solutions • The explosive growth in e-commerce is creating corresponding growth in card-not-present (CNP) transactions, which in-turn, is creating a huge need for better authentication / fraud / security solutions for merchants and issuers since these transactions are more vulnerable to fraud compared to card-present transactions – The implementation of EMV in the United States will only exacerbate the problem as fraudsters will increasingly set their sights on card-not-present transactions, which are not directly impacted by the added security of EMV; a similar shift in fraud has occurred in other countries that have already implemented EMV – The underlying payment processing market structure will only become more complex with the introduction of EMV, the emergence of mobile wallets along with a growing number of alternative payment methods; this creates new challenges for merchants, issuers and transaction security vendors in not only navigating the complexity, but in managing risk across channels and payment types • <strong>Transaction</strong> security providers are attempting to solve the authentication / fraud / security problems from various angles: some cater just to merchants, others cater to issuers, and others serve both; some are point solution providers while others offer a broader set of risk management services beyond transaction security; there are also collaborative solutions that leverage data across participating merchants and issuers in order to combat fraud – A large acceptance gap exists between card-present and card-not-present transactions because issuers have more difficulty in authenticating card-not-present transactions due to the shortcomings of the legacy payment infrastructure – While merchants aim to reduce fraud, they also do not want to introduce any friction into the consumer purchase process for fear of losing the sale; moreover, fraud prevention tools must also ensure that they are not overzealous and therefore eliminating what otherwise would be “good” authorizations – Industry solutions like 3-D Secure attempt to solve the authentication problem with card-not-present transactions, but have gained a poor reputation around potential friction with consumers; still, 3-D Secure protocols, when leveraged optimally, can bring significant benefits to merchants (i.e. higher approval rates, interchange incentives, liability shift) • In recognition of the growing market opportunity for transaction security, private equity funding has increased across the space broadly, which is a leading indicator for future M&A activity – A number of providers are likely to be acquired by larger organizations that are looking to either deepen their authentication / fraud / security or payment expertise or broaden their product and service lines 4
Executive Summary Overview (cont.) In this report, we … • Discuss the key industry trends driving card-not-present transactions and the subsequent increase in demand for smarter transaction security solutions ‒ E-Commerce and mobile channels experiencing strong growth, thus driving card-not-present transactions ‒ Payment infrastructure constantly evolving and becoming more complex ‒ Difficulty managing the payment ecosystem leads to frictions and inefficiencies ‒ Payment-related fraud growing rapidly on a global basis across all channels ‒ Significant data breaches becoming more commonplace ‒ EMV mandates expected to increase card-not-present fraud ‒ Consumers can leverage new online and mobile apps to protect against fraud ‒ It’s all about authorizations … good authorizations! • Highlight the various transaction security technologies and solutions available for merchants and issuers ‒ Authentication solutions (including 3-D Secure) ‒ Fraud screening ‒ Tokenization and encryption ‒ Machine learning engines ‒ Collaborative solutions • Interview four CEOs of leading transaction security companies • Provide a broad landscape of transaction security including sector sub-segments • Profile 38 companies involved in transaction security • Include a comprehensive list of private equity financing and M&A transactions in the space 5
Page 1 and 2: Financial Technology Partners Augus
Page 3: I. Executive Summary
Page 7 and 8: Selected Industry Trends E-Commerce
Page 9 and 10: Selected Industry Trends Difficulty
Page 11 and 12: Selected Industry Trends Comparison
Page 13 and 14: Selected Industry Trends Overview o
Page 15 and 16: Selected Industry Trends EMV Mandat
Page 17 and 18: Selected Industry Trends Consumer P
Page 19 and 20: Overview of Transaction Security Te
Page 21 and 22: Merchant Solutions Issuer Solutions
Page 31 and 32: IV. CEO Interviews
Page 33 and 34: CEO Interviews Michael Keresman, Ca
Page 39 and 40: CEO Interviews Yaron Samid, BillGua
Page 41 and 42: CEO Interviews Nuno Sebastiao, Feed
Page 43 and 44: CEO Interviews Nuno Sebastiao, Feed
Page 45 and 46: CEO Interviews Reed Taussig, Threat
Page 51 and 52: V. Competitive Landscape
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VI. Selected Company Profiles
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Financing and M&A Transactions Tran
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A. Singtel Acquires Trustwave for $
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Singtel Acquires Trustwave for $810
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Singtel Acquires Trustwave for $810
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Early Warning Acquires Authentify T
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Overview of FT Partners Strong Doma
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Overview of FT Partners Feedzai Rai
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Overview of FT Partners Selected FT
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Overview of FT Partners Platform of
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Transaction Security

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