EDBI invests in fraud protection firm Vesta to fuel its Asia-Pacific expansion

FRAUD-protection fintech Vesta on Tuesday said it has secured an "incremental investment" from strategic investor EDBI, which will fuel the startup's expansion plans across the Asia-Pacific.

Coupled with a recent US$125 million equity investment from private equity firm Goldfinch Partners, the fresh funds can help the Portland-based firm expand its fraud and approval enhancement platform across the Asia-Pacific through its new regional headquarters in Singapore.

Vesta helps firms, such as those in the telecommunications and e-commerce industries, detect fraud through analysing customers' online payment transactions.

Their platform, built on data science and machine learning with more than 25 years of intelligence, can assess a company's fraud risk in less than a second, chief executive Ron Hynes told The Business Times. Vesta also takes on the risk and liability of fraudulent transactions from their clients.

Besides the cost of fraudulent online transactions - which can account for up to 5 per cent of a company's sales revenue - merchants should also consider the opportunity costs involved when they decline transactions in fear of fraud, said Mr Hynes.

Some merchants are passing up potentially good transactions in order to err on the side of caution, he added. "Removing the fear of fraud decreases the likelihood of incorrectly declining good customer transactions and increasing revenue."

Vesta aims to tap the rapidly growing mobile phone and Internet economy to expand its presence in South-east Asia, focusing on key markets such as Indonesia, the Philippines, Thailand and Singapore.

Despite the growth of fraud - including account takeovers, transaction fraud, e-skimming and brute force attacks driven by professional crime rings - most organisations are still reliant on reactive strategies, using manual safeguards and low-tech models with high operating costs to manage these events, resulting in lost revenue and poor consumer experiences, said Vesta.

A large majority of the merchants in South-east Asia end up employing staff to manually review and approve transactions," said Shabab Muhaddes, Vesta's general manager for the Asia-Pacific. "There is a huge amount of operational inefficiencies involved with a manual review process, and this is another pain point that our technology can solve."

He added: "The Asia-Pacific is a region that has an immediate need for our firm's solutions and it was a natural choice to make Singapore our regional headquarters. We are thrilled to partner with EDBI and be part of their portfolio family, and we are looking forward to working together to build and grow partnerships across the region."