Israel is well known as a world leader in cybersecurity and a critical innovation hub driving the development of tools and resources aimed at fighting cybercrime and managing the increased digital security risks organizations face today.
Investors know this all too well.
According to Israel National Cyber Directorate, in 2021, the country’s cybersecurity sector attracted a record $8.8 billion in funding, and one out of every three cybersecurity unicorns in the world is based in the Middle Eastern country.
It is not surprising then that many of Israel’s cybersecurity firms sell their products and services to militaries and intelligence agencies across the world, but also to private businesses, from banks and FinTechs to online platforms and retailers.
Israel’s role as a lynchpin in the global cybersecurity ecosystem also means that local businesses are deeply embedded into payment networks and technologies. In recognition of this, Mastercard launched a FinSec innovation lab in the country last year, designed to cultivate startups working at the intersection of cybersecurity and FinTech.
Read on: Mastercard Launches Innovation Lab in Israel with Enel X
As the FinSec lab states on its website, the incubation program will help companies develop solutions across a range of verticals including in the fields of digital authentication, threat intelligence and detection, anti-fraud, and anti-money laundering.
Anti-Fraud and Chargeback Mitigation
Helped by strong cybersecurity talent and a healthy startup scene, Israeli companies are going on to support digital payment systems around the world, at both the service provider and the merchant level.
For example, Israeli startup Justt uses artificial intelligence (AI) to protect businesses against chargeback fraud. The firm’s technology can be integrated with most of the world’s biggest payment providers like Visa and Mastercard as well as modern online payment providers like PayPal and Stripe.
Related: Chargeback Mitigation Startup Justt Names New Execs
Justt says its technology can recapture 60% to 80% lost from illegitimate chargebacks that occur post-transaction. This reduction in costs can alleviate the significant burden of chargeback fraud on businesses that lose money to fraudulent transactions and illegitimate claims from cardholders, as revealed in a PYMNTS study on chargebacks.
That study, based on a survey of 301 merchants whose annual revenues from web-based or mobile app sales ranged from $20 million to $1 billion-plus, found that 77% of merchants reported that the cost of fraud, disputes and chargebacks contributes to the damage to their business arising from cardholder disputes.
Read on: Half of Merchants Say Sunk Cost of Dealing With Chargebacks Is Their Worst Problem
As well as helping businesses to recover lost funds, Israeli tech companies are also creating solutions to prevent fraudulent transactions in the first place.
Credorax’s Chargeback prevention solution is part of the Tel Aviv-based FinTech’s suite of risk management tools designed to protect merchants from fraud and chargebacks. Consisting of a fraud detection algorithm and an automatic transaction blocking mechanism, the system can be tailored to individual businesses’ specific needs and risk appetites.
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