ACI Worldwide is to acquire UK-based payment fraud prevention outfit Retail Decisions (ReD) for $205 million in cash.
ReD offers a suite of products that are present at every stage of the payments value chain, supporting merchants and PSPs, issuers and acquirers, processors and switch networks. Operating a successful SaaS and transaction-based model, the privately-owned company boasts over 80% recurring revenue.
In acquiring ReD, ACI Worldwide is looking to capitalise on the boom in online and mobile shopping and increasing focus on card-not-present fraud. The market for CNP fraud prevention technology is expected to spike in the US over the coming years as the nation's banks and retailers switch to EMV-based chip card technology.
Julie Conroy, research director, Aite Group, says: "Merchants around the world, and banks for that matter, should prepare for a very sharp increase in card-not-present fraud. Without significant preventative efforts by issuers and merchants alike, we're going to see pretty dramatic increases."
Philip Hasley, president and CEO of ACI Worldwide, says the purchase of ReD will provide merchants with a one-stop shop for all of their fraud prevention needs across multiple online, mobile, and physical point-of-sale channels.
"ACI and ReD together have an unrivaled merchant retail solution - global, omni-channel with integrated fraud management built on Universal Payments technology," he says. "This solution will not only guarantee a consistent, unified customer experience in any retailer modality, but also will be a key part of our real-time commerce, any-to-any transaction strategy. Additionally, ReD's consortium models, business intelligence offerings, modeling and risk analyst expertise will both complement and enhance our issuer risk management solutions."
The transaction is expected to close in the middle of third quarter, at which point ReD will contribute approximately $18 million in revenue and $4 million in adjusted Ebitda for the remainder of 2014.