A Chicago-based company that detects payment-card fraud using machine learning and data analytics has received a boost from the Innovate Indiana Fund, an Indiana University program that provides early-stage venture capital.
Rippleshot, co-founded by IU alumnus Yueyu Fu, raised $2.6 million in a funding round in February.
Chicago-based venture firm KDWC led the group of investors, which also included funding from CMFG Ventures. IU did not disclose how much it contributed to the round.
The Innovate Indiana Fund aims to promote entrepreneurism within the IU family by helping early-stage venture companies grow to the next level of success.
The company plans to use the funds to launch its product for merchants later this year and increase the size of its technical team that works on a product for banks and credit unions.
“According to The Nilson Report, payment-card fraud is expected to total more than $183 billion between 2015 and 2020,” Fu said in a statement.
“When fraud is discovered, banks and credit unions must reissue cards, refund fraudulent charges, and brace for customer churn,” he said. “Fraud also affects merchants, who are more liable than ever for fraud because of the implementation of the EMV chip, or Europay, MasterCard and Visa in the United States.”
Past efforts to prevent fraud have primarily addressed one side of the industry—protecting either the banks or the merchants. But Fu said Rippleshot is “uniquely positioned to bridge the fraud-detection gap between banks and merchants by using data.”
Rippleshot’s cloud-based technology processes millions of payment-card transactions in real time to pinpoint when and where a breach of card data occurs. Following detection, the company identifies which cards are most at risk of seeing fraudulent activity and suggests appropriate strategies to prevent fraud loss.
Kenneth Green, managing director at the Innovate Indiana Fund, said the group was attracted to investing in Rippleshot because of its use of machine learning to address a multibillion-dollar problem.
“It’s exciting to connect with Indiana University alumni like Yueyu Fu whose careers and experiences have brought them to a place to make a significant societal contribution,” Green said in a statement.•