Artificial Intelligence & Machine Learning , Finance & Banking , Fraud Management & Cybercrime

Visa Acquires AI Leader Featurespace for Payments Protection

Visa plans to purchase a fraud prevention vendor founded by a Cambridge University doctoral student to provide protection against payment fraud and financial crime risks.

See Also: Revealing the threat landscape with the 2024 Elastic Global Threat Report

The San Francisco-based payment card services giant said its acquisition of Cambridge, England-based Featurespace will protect financial services organizations from fraud and boost Visa's portfolio of risk-scoring and fraud detection services for clients worldwide. Featurespace's platform detects anomalies in payment behavior and has more than 80 direct customers, including big banks such as HSBC and NatWest.

"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 global 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. We look forward to welcoming the Featurespace team to Visa."

Terms of the acquisition weren't disclosed, but investor IP Group expects to receive $149.8 million for its stake in Featurespace, representing a 70% uplift in net asset value since the end of 2023. Visa's stock is up $1.98 - or 0.73% - to $271.61 per share in trading Thursday. The acquisition is expected to close by September 2025, and Visa and Featurespace didn't immediately respond to interview requests.

What Featurespace Brings to the Table

Featurespace, founded in 2008, employs 419 people and has raised $111 million in nine rounds of outside funding. The company was founded by David Excell, who started Featurespace as a Cambridge University doctoral student while researching the application of statistical and machine learning methods to understand behavioral data (see: Card-Not-Present Fraud and Scams: What Concerns Banks?)

"Featurespace's Adaptive Behavioral Analytics started with a groundbreaking concept: to analyze all transactions and recognize patterns of 'normal' or 'good' payment behavior, as well as 'bad' behavior," Excell said in a blog post Thursday. "At the time, this approach was revolutionary. We highlighted the significance of time series and sequential data in making decisions based on transaction data."

The company pioneered a novel approach to fraud detection by leveraging machine learning models that analyze transaction behavior to detect fraud schemes and improve over time. The combination of Visa's global reach and Featurespace's cutting-edge AI technology positions both companies to offer superior fraud detection technology to financial institutions and consumers, the company said.

"We are truly AI-native, deploy leading machine learning, and empower the best and brightest minds," Excell said in the blog post. "This allowed us to develop real-time payment protection with algorithms that maintain high accuracy over time."

The rising sophistication of financial crime such as scams and low-value fraud makes real-time detection crucial, and Featurespace's technology plays an essential role in safeguarding transactions and reducing fraud losses for banks and other financial institutions. Visa said the acquisition of Featurespace aligns with its strategy of investing in security technology to protect the company's payment network.

How Featurespace Fits Into Visa's Anti-Fraud Strategy

Featurespace's adaptive behavioral analysis and recurrent neural network technologies are critical in detecting both low- and high-value fraud, addressing the growing complexity of financial crimes, the company said. Over the years, Featurespace said, it expanded its footprint globally, establishing offices in key markets in North America and forming partnerships that allow the company to scale rapidly.

"Financial crime accounts for 40% of all crime in the UK and contributes to £2.3 billion in losses annually," Excell said. "Before Featurespace, the industry protected against payments by matching against only known fraud types. In the fast-paced world of fraud prevention, real-time payment protection needs a consumer context - separating good from bad transactions - to remain effective."

Visa said it has already invested billions of dollars in technology aimed at reducing fraud, and the integration of Featurespace's technology will further the company's ability to address complex security challenges based by financial institutions and payment providers. Visa said buying Featurespace will help the company offer AI-based tools that not only react to threats but proactively anticipate them.

"It has been a privilege to work alongside … the entire Featurespace team as they've grown into a highly effective AI-driven financial fraud detection system," said Insight Partners Managing Director Lonne Jaffe. "The talented AI research teams in Cambridge, U.K. and in the U.S. have made numerous scientific innovations. Thousands of businesses and millions of consumers stand to benefit from this partnership."

The proposed Featurespace deal comes just two weeks after Visa rival Mastercard agreed to buy threat intelligence powerhouse Recorded Future for $2.65 billion to better protect digital transactions. The deal also comes three days after the U.S. Justice Department accused Visa of violating antitrust law and suppressing competition by threatening merchants with high fees and paying off potential rivals.