Visa Strengthens Financial Crime Prevention Efforts with Featurespace Partnership, Reuters Reports

Visa Expands Fraud Prevention Capabilities with Acquisition of Featurespace

By Manya Saini

Visa announced on Thursday that it has acquired Featurespace, an AI-driven payments protection company, as part of its strategy to enhance its financial crime and fraud detection services.

As instances of sophisticated financial crimes, including hacks and ransomware, continue to rise—often facilitated by generative AI—fintech companies, especially those in the payments sector, are increasingly turning to AI-powered solutions for fraud prevention.

Although Visa did not disclose the financial details of the acquisition, a report from Sky News last month estimated the deal to be valued at £700 million (approximately $935 million).

Featurespace’s largest shareholder, Britain’s IP Group, anticipates receiving £134 million in cash from the acquisition. The group has invested a total of £22.9 million in Featurespace over seven funding rounds.

Founded in 2008 and based in Cambridge, UK, Featurespace serves notable clients including banking firms like HSBC, NatWest, and Worldpay.

Visa stated that the AI-enabled solutions from Featurespace will enable its clients to manage fraud in real time. In July, Visa reported successfully preventing 80 million fraudulent transactions worth $40 billion globally last year, a feat attributed to its investments in AI technology.

Earlier this month, Mastercard also made headlines with a $2.65 billion acquisition of threat intelligence company Recorded Future.

Analysts at William Blair have remarked that the Featurespace acquisition is a strategic fit for Visa, expanding its value-added services beyond traditional processing and merchant solutions. They believe that diversifying revenue streams through value-added services is crucial for Visa, especially given the increasing regulatory scrutiny on transaction-based revenues.

Additionally, earlier this week, the U.S. Department of Justice filed a lawsuit against Visa, alleging anti-trust violations and claims of suppressing competition.

In recent years, Visa has faced increasing scrutiny from regulators and lawmakers regarding its market practices, with accusations of a duopoly alongside Mastercard—claims both companies have denied.