Plaid and e-commerce fraud-focused fintech Riskified have forged a partnership to bring Riskified’s AI-powered risk intelligence tools to merchants receiving automated clearing house payments.
The partnership was announced Monday at Money 20/20 in Las Vegas.
ACH payments have traditionally been used for direct deposits and routine withdrawals. Volumes increased more than $1 trillion in 2022 to $76.7 trillion, according to the National Automated Clearing House Association.
ACH has largely been used for low volume, low risk transactions, like paying bills, said Max Admoni, Riskified’s director of e-commerce platform partnerships. However, he explained, ACH has expanded into crypto or trading platforms and buying precious metal metals online — typically high value, high risk.
Riskified underwrites transactions, deciding whether they should be approved or declined, on behalf of merchants like Wayfair, therefore derisking the transaction for the merchant and taking on the liability. The company does so with the use of artificial intelligence, and last year, it underwrote over $105 billion in transactions, Admoni said.
The power, he notes, is in the data: Riskified has collected behavioral data from consumers on 2.5 billion transactions historically, from hundreds of e-commerce merchants. That treasure trove is more than any one of their merchant clients would have on their own.
“Historically, we were focused on card transactions because that's where the majority of fraud is — in chargebacks,” Admoni said. “Because we also support merchants in [the crypto and trading] industries, they've come to us to take on the liability for ACH. The Plaid partnership is basically our expansion into that segment.”
Riskified’s platform aligns with Plaid’s Signal, a transaction risk scoring mechanism that provides data to merchants so that they can better assess a transaction’s return risk. It also aligns with Beacon, an anti-fraud network Plaid launched this summer.
“Innovation around risk and fraud assessment is rapidly expanding the use cases for ACH,” Tamara Romanek, Plaid’s head of partnerships, said in a prepared statement. “Using Riskified’s guarantee solution for protection against fraud and insufficient funds allows merchants to confidently approve ACH payments for more use cases, while Plaid Signal provides greater intelligence to assess the risk of a transaction to unlock an instant ACH experience.”
Admoni said Riskified aims to expand its ACH offerings and coverage to more merchants with this partnership, beyond their current trading platform, crypto platform, and marketplace clients. He expects the common use of ACH payments to expand to different verticals as well, including travel.
“It's sort of like an enabler to our go-to-market strategy, right? Because we get faster to those merchants that are using ACH — with Plaid, specifically — and it gives us more access to more volume of that type of payment,” Admoni said.
The partnership was born out of eight months of work, with the timeline aided by the fact that they have many mutual clients, Admoni noted.
