Payments solution company Razorpay has made its first acquisition as it takes over Gurgaon-based Thirdwatch, a company that specialises in big data and machine learning for real-time fraud prevention. The firm did not disclose the financial details of the transaction.

Razorpay said the acquisition would augment the work it had been doing in artificial intelligence (AI), machine learning and big data as it looked to improve payment experience and avoid fraudulent transactions.
The company said the acquisition of Thirdwatch was aligned with its long-term strategy of building core-competencies in big data and AI.

Thirdwatch, now a wholly-owned subsidiary of Razorpay, will be based at the company’s headquarters in Bengaluru.

“Considering the changing landscape, the role of fraud has been significantly underrated in economic analysis. Estimates suggest that by FY22, the Indian e-commerce industry is expected to reach $150 billion. With around 4-5% transactions being fraudulent, Indian e-commerce players will lose over $5 billion to fraudulent transactions by 2020,” the firm said.

Razorpay chief executive and co-founder Harshil Mathur said the acquisition was a perfect fit for the firm. “Fraud has been the albatross around e-commerce companies’ necks for the longest time and we believe through this acquisition, we will empower businesses across industries to digitally transform and disrupt, by improving their response and redressal mechanisms of combating fraud. The team at Thirdwatch comes with an exceptional understanding and expertise in AI, machine learning and data sciences. Together, I believe we can help reduce frauds by 30-40% by next year,” he said.

Shashank Agarwal, founder of Thirdwatch, said fraud had been one of the largest and longest concerns for e-commerce companies.

“Most of their systems frequently fail while identifying fraudulent patterns and therefore not capable of differentiating between the genuine customers and fraudsters. There is a dire need for a data-driven solution to help identify these patterns and reduce losses of any kind, to help the marketplace function at an optimal level,” he pointed out.

Razorpay claims to be currently powering digital payments for 3.5 lakh businesses like IRCTC, Airtel, BookMyShow, Zomato, Swiggy, Yatra and Zerodha, among others, and plans to increase this to 4.5 lakh by 2020.
“This converged payments solution company expects a 5x growth in its revenue by the end of the next fiscal year,” it stated.