ACI Worldwide announced their acquisition of an industry veteran fraud solution provider Retail Decisions (ReD) for $205 million in cash in late July. The acquisition will help ACI bolster their services for both merchants and financial institutions. The deal is expected to close during the third quarter.
ACI Worldwide is a publicly traded company powering electronic payments for financial institutions, brick-and-mortar and CNP merchants, as well as processors around the world. Their client list includes more than 250 leading global retailers and 21 of the 25 world’s largest banks. Retail Decisions, founded in 2000, focuses on fraud prevention services for issuers, acquirers, PSPs and merchants across multiple channels.
The ReD acquisition will allow ACI Worldwide to expand existing services as well as offer new ones. The company already works with many merchants, but the ReD acquisition will expand this client list and enable the company to offer more complete fraud prevention services for the online channel. Incorporating the ReD Shield service for merchants ACI Worldwide will extend the fraud management capabilities within their Universal Payments (UP) technology, which will also now be available to existing ReD merchant clients. In a press release following the acquisition announcement ACI Worldwide emphasized the importance of fraud detection capabilities in the CNP channel as the EMV rollout is expected to shift more fraud online.
The acquisition of ReD also boltsters ACI Worldwide’s omni-channel payment services. ACI Worldwide CEO, Philip Heasley, discussed the issues retailers will face “operating disparate systems for their online, mobile and point-of-sale operations,” but believes that the “ACI and ReD together have an unrivaled merchant retail solution,” that is “global, omni-channel with integrated fraud management built on Universal Payments technology.”
While omni-channel retail payments and fraud prevention was the focus of the announcements following the acquisition, ReD’s platform and services stand to benefit and expand ACI’s services for financial institutions as well. This will primarily be through ReD PRISM, a transaction monitoring and risk management software solution for issuers, processors and switch networks. The acquisition of Retail Decisions brings several other assets to ACI including a merchant gateway and ReD Fraud Xchange merchant/issuer data sharing.
ACI is expecting the Retail Decisions acquisition to increase revenue and profits right away. In a forward looking statement the company predicted that if the deal closes when expected that ReD will generate approximately $18 million in revenue and $4 million in adjusted EBITDA. The ACI / ReD deal is the largest acquisition of a fraud prevention vendor since Experian acquired The 41st Parameter in October, 2013.
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