Following the investment by Advent International, MANGOPAY has made its first acquisition. It has acquired Nethone, the fraud detection and protection company. The combination makes sense for payments vendors. It will deliver robust end-to-end fraud detection systems and extensively extend the MANGOPAY platform’s capabilities. MANGOPAY is a payment solution dedicated to platforms and marketplaces.
Neither party disclosed the terms of the deal. However, the acquisition sees a complete ownership transfer, with non of the investors in Nethone retaining a stake in the larger business. Hubert Rachwalski von Rejchwald, CEO and co-founder of Nethone, commented, “We are excited to have Advent International as our new majority investor and to be joining the MANGOPAY rocket ship.
“Going forward, on top of accelerating Nethone’s own dynamic expansion according to our standalone business plan, we will work on the tremendous potential identified among MANGOPAY’s 2,500+ existing platform customers. Together we will take our unique Know Your User technology and further refine it to be the best-in-class platform-specific solution.”
Nethone will remain an independent business unit under Rachwalski von Rejchwald and will continue to drive its solutions and growth forward in addition to the promising integration with the MANGOPAY platform. Enterprise Times spoke to both Romain Mazeries, CEO of MANGOPAY and Hubert Rachwalski von Rejchwald, CEO of Nethone, about the deal. Rachwalski von Rejchwald will join the MANGOPAY executive committee.
With marketplaces accounting for over two-thirds of global e-commerce transactions, they are a prime target for fraudsters. Together MANGOPAY and Nethone will create the first fraud prevention solution built specifically for platforms and marketplaces. The combined solution will, according to MANGOPAY:
- Prevent over 95% of account takeovers (ATO), reducing fake accounts, fraud rates, chargebacks and unauthorized transactions
- Unlocking upsell potential, increasing conversion rates by 9% and approval rates by 26%, as well as reducing false declines due to suspected fraud
- Increase operational efficiency and scalability by reducing manually-reviewed traffic by 60% through well-explained recommendations
Enhancing MANGOPAY’s pay-in, payout authentication and seller onboarding capabilities, with deeper Know Your User intelligence, protects marketplaces from sophisticated fraud and abuse while offering buyers and sellers a frictionless experience.
Why Nethone?
Mazeries answered, “We started looking at an anti-fraud solution to integrate. In the beginning, it was more of a partnership. We discussed several solutions, and we were very, very impressed by the capabilities of Nethone. What we loved about it was that it went beyond payment and covered all the user journey from onboarding to payment. By discussing with Hubert, we saw that we shared the same vision in terms of bringing user intelligence everywhere in the user journey to deliver a frictionless experience to the end user.”
Mazeries is looking to integrate the Nethone capabilities quickly and then enhance that to create a unique value proposition in the market. When will that integration come to market?
Mazeries replied, “We have worked together for a little bit less than a month now. We aim to have the first version embedded into MANGOPAY in the first quarter of 2023. Of course, we will iterate and bring more innovation and functionalities to our platforms during 2023.”
Mazeries acknowledged that Nethone was a larger business in terms of its geographical footprint and customer base and that this was not a merger. He added, “We will keep Nethone as a standalone product because we want them to continue the growth and thanks to Advent primary injection, we will also fund the growth of Nethone as a standalone product.”
The collaboration is already benefitting customers. Platforms can improve conversion rates thanks to the optimization of pay-in transaction scoring, better 3DS2 exemption management and ID check validation.
Taking MANGOPAY beyond payments
This is not just about adding a fraud and payments platform together. ET asked Mazeries whether he sees the combined platform feeding intelligence back to platforms and retailers that go beyond the current capabilities.
Mazeries replied, “That’s the whole point of what we are aiming to do. We want to bring user intelligence into all the user journeys, from the onboarding to the payout. We want to bring back the scoring and data points for every change of behaviour or data point Nethone triggers to the platform. Part of the success of Mangopay is we give the platform, like, a lot of control, of what is happening, compared to other competitors on both sides, where payments or the fraud capabilities, pretty much a black box.”
Rachwalski von Rejchwald added, “This is very important. We believe that control is something that platforms and online businesses are searching for, and more transparency in general. A lot of fraud and risk vendors are really trying to somehow mask what is behind the logic behind the recommendations that they are shipping. Within Nethone, we were always big believers in being able to explain as well as possible, what the three reasons for a particular rejection or acceptance should be.
“We believe the market is becoming increasingly ready to absorb these additional attributes and have a more informed way of using sophisticated technologies. Even if it features machine learning or AI, we believe that we can explain and actually have human-interpretable pieces of information at the output. So this is a big part of the vision, and we definitely want to continue with this.”
On growth
Mazeries is looking to expand the company beyond its current boundaries. He is looking to expand into the US, getting the appropriate licence and partnering with a bank there to process payments locally. With Nethone already having a presence in the US, they can already leverage some experience and relationships there.
This is the first acquisition that the company has made since the investment by Advent. What is the acquisition strategy looking forward to?
Mazeries stated, “We’ll do some announcements in the coming months. We have a plan. I’m very happy because we found a growth partner who believes in our strategy. Since April, we have our vision for three years together. We don’t stop looking at opportunities that can accelerate our growth journey and accelerate our run-up. Nethone was obvious. We could have spent a decade trying to build the same capabilities as they have today. We’d never get to this point. There are other components in our run-up strategy that we continue to look at M&A.”
The benefits for Nethone
While the benefits to MANGOPAY are obvious, Nethone is getting investment and backing indirectly from Advent, but are there other benefits of this deal for the Fraud company?
Rachwalski von Rejchwald commented, “We didn’t speak much about this; MANGOPAY is also a tremendously experienced organisation in various aspects of what operating platforms mean in terms of compliance, legal, the payment acumen and a lot of product development capabilities and also, infrastructure-related capabilities, this is something we want to draw from the executive committee or the management team, and the changes within it over the last few weeks or months. This is a super, super exciting team of professionals bringing experiences from top companies, Amazon, eBay, American Express PokerStars, that we want to learn from and contribute to and together build something.”
Enterprise Times What does this mean
This is a move typical of an Advent business, MANGOPAY is growing it’s business wider. The acquisition of Nethone gives it access to a leading fraud detection solution when eCommerce must reduce the drain that fraud and cybercriminals have on their business. If they can roll out the integration quickly, they will provide an attractive one-stop shop with a white-labelled solution that will be attractive to many.
Nethone should also help with a launch in the US next year, and whilst it is never easy, and there are compliance hurdles to overcome, MANGOPAY might be able to accelerate its growth both in its home region and North America. For Nethone, this provides a platform for further growth. While there are questions about whether it can maintain its independence, if it can continue to deliver and improve its services to other financial institutions, this may even help MANGOPAY expand in the future.
