Visa Buys Featurespace to Add AI-Based Real-Time Fraud Defense

Visa says it is acquiring payments protection technology firm Featurespace to boost its anti-fraud capabilities.

“Since its inception out of Cambridge University’s engineering department, Featurespace has developed innovative algorithmic-based solutions to analyze transaction data and detect even the most elusive fraud cases,” the payments giant said in a news release Thursday (Sept. 26).

The company did not provide a cost for the acquisition, though a report last month suggested a price tag of $925 million. The transaction is expected to close during fiscal year 2025.

According to Visa, the two firms’ combined expertise will allow clients to manage fraud in real-time and protect payments with artificial intelligence (AI)-powered solutions.

“Providing our clients with solutions that can adapt to and anticipate the changing threat landscape is of the utmost importance,” said Antony Cahill, Visa’s head of value-added services. “Featurespace’s strong foundation in AI will enhance our existing product portfolio and enable us to address our clients’ most complex and pressing challenges.”

Featurespace Chief Operating Officer Tim Vanderham spoke with PYMNTS’ Karen Webster last month, noting that “when you think about the billions and billions of dollars that come from scams globally,” the money made from illicit gains dwarfs the revenues of some of the biggest businesses on the planet.

That interview came in the wake of a Wall Street Journal article on the rise of “scam dens,” which function essentially as business centers with sophisticated setups, complete with separate departments for training fraudsters, “onboarding” unwitting victims and KPIs used to conclude whether or not certain scams are working.

“Along the way, fraudsters are proving adept at using artificial intelligence to develop relationships and trust on the part of their victims, preying on human emotions and making off with individuals’ life savings and retirement holdings, draining their bank accounts with brazen speed, notably through authorized push payments,” PYMNTS wrote.

Vanderham argued that the $2.7 billion in fraud reported in the U.S. just a few years ago represents just a fraction of the true tally — mainly because people are embarrassed to report that they’ve fallen prey to scams.

And the banks and service providers tasked with battling fraudsters face their challenge when it comes to using AI to fight AI.

“They’re not bound by the same criteria when it comes to leveraging AI and machine learning,” Vanderham said.