Tag: EMV

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ZirooPay raises $11.4M to scale its mobile POS solutions for retailers across Nigeria

The number of POS terminals in Nigeria grew from 150,000 in 2017 to 543,000 in April 2021, according to Statista. During that period, the volume of POS payments in the country also increased tremendously, hitting more than 500 billion as of May 2021.

In Nigeria, POS terminals are used to process card payments at retail locations as well as for agency banking purposes, a branchless banking system where agents act like human ATMs. And while terminals have different providers (banks and fintechs) and functionalities, they primarily operate online with just a handful of them having offline capabilities too.

Lagos- and Helsinki-based ZirooPay, one such provider, has raised an $11.4 million Series A round led by Lagos-based VC fund Zrosk Investment Management. Existing investors Nordic venture fund Inventure returned, with participation from other private and institutional funds such as Fedha Capital and Exotix Advisory.

Individual investors like Petri Kivinen, the former managing director at Deutsche Bank, Morgan Stanley and Renaissance Capital; Abiodun Ajai, the director, Sub-Saharan Africa of Bank of America; and Jonas Dromberg, former Bureau chief at Bloomberg, also took part.

This new capital will be deployed toward expanding its payment infrastructure, accelerating growth and growing its team, the company said.

In 2014 when we featured the company, the pitch then from IroFit (ZirooPay’s parent company) was that its “Internet-free” tech —a mobile platform for small businesses to accept card payments via a mobile app and EMV-certified card reader — operated in areas where there is no data coverage, particularly in emerging markets.

Solely based in Helsinki at the time, CEO Omoniyi Olawale said the funds it raised ($600,000 in seed) would initiate a launch in Nigeria. However, it wasn’t until five years later that the firm completed that launch in Lagos. And on a recent call with TechCrunch, Olawale said the delay occurred because his company, which raised a further €2 million, was fine-tuning its technology and adding more capabilities. 

That pitch remains unchanged and after three years in operation, ZirooPay has grown immensely. According to the company over 15,000 merchants use its POS terminals and mobile application. These merchants have processed $500 million — a 5,000% increase within three years — across 10 million transactions, the company continued. 

One of the biggest challenges to the mass adoption of card payments at retail locations is the rate of transaction failures due to poor internet connection. “That led to us creating our in-house technology we have a patent for that allows us to process those events in real time without internet connection,” said Olawale about his decision to make ZirooPay offline-first.

“So the product got built around that major problem; with that, we can identify to provide a 95% transaction success rate against the less than 50% that you find in the market,” he added.

The next big pain point for POS terminals is functionality, which means what other features can they offer beyond processing payments. Every retail and agent interaction with customers is a data mine to the payment processor and merchants. But since POS terminals hardly have bookkeeping capabilities, what happens more often than not is that merchants manually reconcile their books daily or rely on Khatabook-esque platforms such as Kippa to digitize their processes.

But ZirooPay is telling merchants who use its platform not to look elsewhere. Its mobile application allows small businesses across the retail, agency banking, hospitality and services sectors to perform similar tasks, such as tracking sales and managing business operations, said Olawale.

“Think about everything that the cash registers seen in big supermarkets can do; with an Android application and a mobile point-of-sale card reader, we provide that same functionality to small businesses,” he remarked.

“We’ve been able to see over 70% of our users migrate from paper-based accounting to depend on the in-app sales accounting within three months of onboarding.”

The growth funding will help ZirooPay expand its product suite and include additional payment channels and options in a bid to build out an omnichannel system for merchants. And as POS providers in Nigeria, particularly fintechs, increasingly focus on agency banking—a massive fintech segment that heavily drives financial inclusion—ZirooPay fancies the prospect of dominating an open retail space.

“No major company is coming in with modern technology trying to tackle this space and that’s one area that we see an opportunity for us because we are primarily a retail payment platform. Even though we provide agency banking on the side, our focus is on retail, and that’s something that differentiates us from the other players,” said the CEO.

Samson Esemuede, the managing director and chief investment officer of Zrosk, said of the investment: “The growth in the online economy of the African continent has been remarkable; however, the offline economy is orders of magnitude larger than the online economy.

“ZirooPay has a patented technology advantage (that works without an internet connection) and distribution model that significantly increases the odds of digitizing the offline economy at a unit cost that makes the story particularly compelling. The payment space has become well-resourced and competitive, but the white space we see in the digitization of cash is the reason we are optimistic about the outlook for this investment.”

IroFit Scores $600K Seed Round For “Internet-Free” Mobile Payment Tech Targeting Emerging Markets

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RSA spins off fraud and risk intelligence unit as Outseer

RSA Security has spun out its fraud and risk intelligence business into a standalone company called Outseer that will double down on payment security tools amid an “unprecedented” rise in fraudulent transactions.

Led by CEO Reed Taussig, who was appointed head of RSA’s Anti-Fraud Business Unit last year after previously serving as CEO of ThreatMetrix, the new company will focus solely on fraud detection and management and payments authentication services.

Outseer will continue to operate under the RSA umbrella and will inherit three core services, which are already used by more than 6,000 financial institutions, from the company: Outseer Fraud Manager (formerly RSA Adaptive Authentication), a risk-based account monitoring service; 3-D Secure (formerly Adaptive Authentication for eCommerce), a card-not-present and digital payment authentication mapping service; and FraudAction, which detects and takes down phishing sites, dodgy apps and fraudulent social media pages.

Outseer says its product portfolio is supported by deep investments in data and science, including a global network of verified fraud and transaction data, and a risk engine that the company claims delivers 95% fraud detection rates.

Commenting on the spinout, Taussig said: “Outseer is the culmination of decades of science-driven innovation in anti-fraud and payments authentication solutions. As the digital economy continues to deepen, the Outseer mission to liberate the world from transactional fraud is essential. Our role as a revenue enabler for the global economy will only strengthen as every digital business continues to scale.”

RSA, meanwhile, will continue to focus on integrated risk management and security products, including Archer for risk management, NetWitness for threat detection and response, and SecureID for identity and access management (IAM) capabilities.

The spinout comes less than a year after private equity firm Symphony Technology Group (STG), which recently bought FireEye’s product business for $1.2 billion, acquired RSA Security from Dell Technologies for more than $2 billion. Dell had previously acquired RSA as part of its purchase of EMC in 2016.

It also comes amid a huge rise in online fraud fueled by the COVID-19 pandemic. The Federal Trade Commission said in March that more than 217,000 Americans had filed a coronavirus-related fraud report since January 2020, with losses to COVID-linked fraud totaling $382 million. Similarly, the Consumer Financial Protection Bureau fielded 542,300 fraud complaints in 2020, a 54% increase over 2019.

RSA said that with the COVID-19 pandemic having fueled “unprecedented” growth in fraudulent transactions, Outseer will focus its innovation on payments authentication, mapping to the EMV 3-D Secure 2.x payment standard, and incorporating new technology integrations across the payments and commerce ecosystem. 

“Outseer’s reason for being isn’t just focused on eliminating payments and account fraud,” Taussig added. “These fraudulent transactions are often the pretext for more sinister drug and human trafficking, terrorism, and other nefarious behavior. Outseer has the ability to help make the world a safer place.”

Valuation information for Outseer was not disclosed, nor were headcount figures mentioned in the spinout announcement. Outseer didn’t immediately respond to TechCrunch’s request for more information. 

Dell sells RSA to consortium led by Symphony Technology Group for over $2B

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Card readers at electric vehicle charging stations will weaken security, researchers say

Electric vehicle charging stations could become one of the next big targets for fraudsters — thanks to proposals in several state that researchers say would weaken their security.

Most electric vehicle (EV) charging stations rely solely on a credit card linked to an app or through contactless payments with RFID-enabled credit cards or through a driver’s smartphone. Contactless payments are one of the most secure ways to pay, cutting out the credit card entirely and reducing the chance that a card will be cloned or have its data skimmed. For charging stations — often in the middle of nowhere and unmonitored — relying on contactless payments can reduce device tampering and credit card fraud.

But several states are proposing EV charging stations install magnetic stripe credit card readers, which the researchers are prone to abuse by fraudsters.

Arizona, California, Nevada, Vermont, and several states across New England are said to be considering installing credit card readers at publicly funded EV charging stations.

“While these proposals may be well-intentioned, they could expose drivers to new security risks while providing cyber criminals with easy access to attractive targets,” wrote security researchers April Wright and Jayson Street, in a paper out Monday by the Digital Citizens Alliance, a nonprofit consumer group.

Instead, they say EV charging stations and other point-of-sale machines should continue to rely on contactless payment methods and lawmakers “should engage with the security community to better understand fraud risks associated with credit card readers.”

“These proposals would effectively reverse the industry’s careful considerations regarding EV charger payment options,” said the researchers.

Much of the issues fall on the continued reliance of magnetic stripe cards, which remains one of the most common payment methods in the U.S.

Where other nations, including the U.K. and most of Europe, have adopted chip-and-PIN as the primary way of paying for goods and services, the U.S. still relies on the insecure magnetic stripe. Hackers can easily skim the data off the credit card and repurpose a stolen magnetic stripe to commit fraud. Although chip-and-PIN is more secure than the magnetic stripe, card fraud remains a risk until chip-and-PIN becomes the primary method for making payments. Even with chip-enabled cards, fraudsters can still steal payment card numbers and card verification codes by using hidden pinhole cameras.

Credit card skimming is said to be a $2 billion industry.

Using mobile contactless payments, like Apple Pay or Google Pay, would largely render the risk from card skimming almost entirely moot, they say.

Until more secure options are used, the introduction of magnetic stripe readers at EV chargers “would represent an unnecessary risk” to drivers.

Schneider’s EVLink car charging stations were easily hackable, thanks to a hardcoded password

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New credit card skimmer worked in plain sight at Aldi stores

 Police in Lower Pottsgrove, Pennsylvania have spotted a group of thieves who are placing completely camouflaged skimmers on top of credit card terminals in Aldi stores. The skimmers, which the gang placed in plain sight of surveillance video cameras, look exactly like the original credit card terminals but would store debit card numbers and PINs of unsuspecting shoppers. “While Aldi… Read More