Establishing trust while making real-time decisions on whom to do business with is a critical skill for a company like Mastercard. So it makes sense that it would announce an acquisition designed to enhance that skill set. This week Mastercard acquired the digital identity verification company Ekata for $850 million.
While the deal is subject to regulatory approval, so far there is no indication that approval is at any risk. Still, we are reminded of rival Visa’s recent attempt to acquire the fintech Plaid for $5.3 billion. The Department of Justice sued to block the deal, claiming it was a ploy to remove a competitor from the battlefield. Plaid withdrew from the deal, fearing a long process without a certain outcome. Subsequently, Plaid raised $425 million at a $13.4 billion valuation, making the decision to withdraw look prescient.
However, Ekata is a very different company than Plaid. The latter is a disruptive fintech that the DOJ believes Visa considered a threat. If you can’t kill it, buy it, right? Ekata is an established tech company in a defined and established space, identity and fraud prevention. For example, Ekata already has 2,000 customers. Among them are A-list names like Lyft, Affirm, American Airlines, Patagonia, and others.
What’s in a Deal?
The deal fills a gap for Mastercard. So Ekata helps its customers make quick, reliable decisions about individual fraud risks. And in a globalized, real-time economy, it’s impossible to be too good at this. Which is why the executives leading this deal emphasize it in their comments. The word “trust” comes up a lot. First, here is what Ajay Bhalla, Mastercard’s president of cyber and intelligence solutions, said about the deal.
“The shift to a more digital world requires real solutions to secure every transaction and instill trust in every interaction. With the addition of Ekata, we will advance our identity capabilities and create a safer, seamless way for consumers to prove who they say they are in the new digital economy.”
And for his part, Ekata’s CEO emphasized the growing importance of meeting the growing demand for rapid identity verification.
“The acceleration of online transactions has thrust global digital identity verification to the forefront as one of the biggest opportunities to build digital trust and combat global fraud. The right identity verification solutions enable inclusive and frictionless experiences. While at the same time, ensuring customer privacy, control, and security. Becoming part of the Mastercard Identity family ensures a broader, collective approach to meeting the growing demands of the digital economy.”
So there’s an interesting side note in Ekata’s origins for the Localogy community. In June 2o19, what was Whitepages Pro within Whitepages.com was spun out as Ektata. Here is how Ekata described the spinoff at the time.
“With our new brand, we have refined our mission to best reflect who we are and what we have been working towards. Ekata is committed to being the global standard in identity verification data, providing businesses worldwide the ability to link any digital transaction to the human behind it.”