ACI Worldwide (NASDAQ: ACIW), a leading global provider of electronic payment and banking solutions, and Retail Decisions (ReD), a leader in fraud prevention solutions, today announced that they have entered into a definitive transaction agreement. Under the terms of the agreement, ACI Worldwide will acquire ReD for an all-cash purchase price of $205 million and expects the transaction to close in the middle of the third quarter, 2014.
Brookwood, England-based ReD is a leading ecommerce and fraud prevention company serving the payments industry. The company’s suite of solutions – ReD Shield®, ReD Fraud Xchange, ReD PRISM®, ReD Alerts, ReDi, ReD1 Gateway and LiveProcessor – helps customers drive up revenues while reducing fraud losses and increasing the efficiency of their fraud management teams. ReD serves retailers, issuers, acquirers, processors and switch networks globally.
ReD has a compelling SaaS and transaction-based financial model, with over 80 percent recurring revenue. The company, with its multi-dimensional detection engine and proprietary global fraud database, generates high customer retention rates and strong revenue growth.
As payments increasingly move online, the focus on card-not-present fraud prevention will also increase. According to market research from eMarketer in a February 2014 report, the global ecommerce market is projected to grow over 17 percent each year, representing a total value of nearly $2.4 trillion by 2017. Further, as the U.S. moves toward adoption of EMV standards, fraud attempts are expected to shift toward the card-not-present online segment. According to Julie Conroy, Research Director, Aite Group, “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.”
ReD’s technology and software solutions bring ACI a proven, global SaaS-based ecommerce offering with integrated fraud detection/management. With ReD, ACI will become the market leader in the rapidly growing payments risk management market across multiple segments globally.
“Retailers are currently operating disparate systems for their online, mobile and point-of-sale operations,” said Philip Heasley, President and CEO, ACI Worldwide. “ACI and ReD together have an unrivaled merchant retail solution – global, omni-channel with integrated fraud management built on Universal Payments technology. 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.”
“We are extremely excited to integrate our leading technology into ACI’s revolutionary Universal Payments,” said Paul Stanley, CEO, ReD. “Together, we will deliver a much more powerful offering that will materially expand the adoption of integrated fraud prevention solutions.”
In related news, ACI separately announced today that it has bolstered its Universal Payments (UP) strategy, delivering an unrivaled merchant retail solution to combat fraud.