[SE] Sardine - An Interview
Instant Payments and Fraud detection
Welcome to this Special Edition [SE] of the SecFraudOps Newsletter. From time to time I will be providing long form articles on topics that I can’t fit into the weekly newsletter. Enjoy this single, longer article from Matt. If this is your first time reading take a moment to subscribe as well!
Sardine just raised over $51 million in a series B funding round. I hadn’t heard of them before, but I wanted to learn more about how they make instant payments safe (at least safer…). Below is an interview I had with the founders about this up and coming company.
How did Sardine get started? What is your origin story?
Sardine was founded by Soups Ranjan, Aditya Goel, and Zahid Shaikh, who'd worked together and wanted to solve one massive challenge involved in fighting fraud. You have to work with 5, 10 or even 15 different vendors to be effective, and that creates a nightmare of integrations. Added to that, fraud is often seen as a cost center not the driver of growth. But the team knew that if you reduce fraud, you increase growth for the business.
Our CEO Soups met fellow Co-Founders Aditya and Zahid while working at Fintech company Revolut to launch their Global expansion and the crypto arm.
Soups was the head of risk at Coinbase from 2015-2019, where he built out their fraud and compliance function to scale. While at Coinbase, Soups was able to massively reduce fraud in one of the most high risk sectors (Crypto) and improve growth. Soups often jokes he "spent the first two years adding friction to reduce fraud, and the next two years using the fraud-fighting skills to reduce friction and make payments faster and safer."
Zahid, headed-up product at Paypal– where he saved ~$40M in fraud losses annually– and Uber, building their device intelligence. In essence, Sardine was built to provide a single API and Platform that can cover both fraud and risk at scale for Fintechs and Crypto.
Who uses or needs Sardine?
Today our largest customers are Fintech and Crypto businesses like Blockchain.com, Brex, FTX, and Wealthsimple to reduce fraud, building seamless NFT and Crypto onramps, and offer instant settlement for users to purchase 30+ Crypto products, including tokens and NFTs.
If you figure out fraud, you figure out payments and growth.
Yet, when you spend enough time in Fintech, you figure out better fraud and compliance results equate to more payments and growth.
At Sardine, we will unlock real-time payments on any rail for consumers and wallets and reduce the fraud losses of the entire industry. Because if you understand what causes the decline or what would lead to the delay, you can make more payments more seamless. This will help grow the entire fintech industry because less fraud implies more real-time payments. And more real-time payments equate to more transactions in the Fintech economy.
What makes Sardine special? What's it's secret sauce?
We have several USPs for Fraud and Compliance. For smaller Fintech companies - Sardine is "all in one." We consolidate 10+ vendors into a single API, and we configure them to work together. In addition to that, we've also created ready-made fraud prevention rules and AI that companies can get started with immediately
For larger Fintech companies and financial institutions who many already have several suppliers. Our proprietary device intelligence and behavior IP catches more fraud, and unique types of fraud that others can't. For example, in the industry scams and "fake investment advisors" have caused consumers to lose $billions, and this increased by 70% over 2021. This may sound bad as a number, but consider that your parents could lose their life savings to this attack. Sardine cannot only detect it, but we've also been able to help clients reduce fraud by up to 7x (see this case study).
We also do Instant settlements for any Fintech, Crypto, or NFT marketplace. One of their biggest challenges is allowing their customers to buy Crypto without declines. Our figures show when buying Crypto or NFTs with cards, consumers' purchases are declined nearly 50% of the time. Additionally, their max spend may be as low as $300. This means consumers lose out on the latest NFT, and merchants lose out on sales. Sardine is able to deliver higher order values (up to $15,000), higher conversion (up to 98%) which creates better experiences for consumers and more sales for our customers.
What does the future of payments look like?
Faster, safer payments. Payments want to be instant and near-free. But the delays and friction are caused by risks and fraud. Globally, real-time payments are growing 33% YoY, but alongside that so are the scams, hacks and fraud attacks. Real-time payments often mean real-time fraud.
But when payments are instant, merchants get paid faster, unlocking economic activity and growth.
What does the fraud landscape look like right now and how will that change over time?
Experience in Fintech teaches you that if you operate an online store or Fintech wallet that is suffering high fraud losses, at first, you might not even be aware it's happening. Then by the time you do, not only have you started to accumulate losses, your customers will see their cards decline when they try to swipe in-store or buy online. High fraud rates create bad payment experiences that deter customers and damage growth for all customers.
This has, unfortunately, been an unspoken rite of passage for many Fintech companies.
But it doesn’t have to be that way.
While there are many fraud and compliance solutions, there is often no way to bring them together and instantly benefit from the expertise of the Fraud teams that built the tools. Sardine has the most flexible and powerful fraud-fighting tools by fraud nerds, for fraud nerds, and builders too.
Payments are becoming instant. Sardine's vision is a world where payments are instant and risk-free.
"But faster payment often means faster fraud"-- It doesn’t have to.
Real-time payments are growing at 33% YoY. Payments are better when they're instant. More instant payments create better consumer experiences and allow merchants to get paid instantly, unlocking economic activity. But instant payments often mean instant pain for merchants and Fintech businesses in the form of fraud losses or high decline rates.
What is one tip for people to personally avoid fraud or be more secure online?
If someone is calling you with an investment offer, and you've never met them, it is a scam. Hang up, and report the call as spam to your mobile phone supplier.
How can people learn more about Sardine?
Head to Sardine.ai, or come find us on LinkedIn and Twitter!