By Riley Kaminer
Even if you’re just an occasional online shopper, chances are you’ve had trouble getting your credit card processed.
While it may seem like a minor problem from a consumer perspective, it’s a major issue for businesses, as a reported 10% of online transactions – at a value of hundreds of billions of dollars – fail.
Miami startup FlexFactor is hoping to change that.
The company just announced that they have raised $16.8 million in a Series A round led by Bessemer Venture Partners to solve what many see as one of the most persistent and expensive challenges in eCommerce.
FlexFactor has built an AI-powered platform that can rescue failed transactions before they slip away for good. This technology reviews every failed payment attempt in real-time, analyzing hundreds of data points to assess whether the decline was due to an actual issue, like insufficient funds, or an incorrect fraud alert. In cases where FlexFactor detects that a customer should have been able to pay, the platform steps in to complete the transaction.
According to FlexFactor co-founder and Chief Commercial Officer Ze’ev Shoval, this approach is already paying off – literally – with its clients seeing a 5% increase in revenue simply by rescuing these declined payments. “Lost customers have lower LTV and are less likely to return again,” he added.
Failed payments are more than a minor inconvenience: they often result in legitimate customers getting turned away at the final step of a purchase because of an error or false flag. For businesses, that’s money left on the table – and worse, it’s customers who may never come back.
“We’re excited to partner with Bessemer Venture Partners on the next phase of our journey, FlexFactor co-founder and CEO Elio Vitucci shared in a statement. “The new funding will further our R&D, while expanding global operations with sales and support.”
“We are poised to rapidly expand in our focus markets as we redefine the possibilities of decline recovery, addressing the unmet needs of merchants everywhere,” Vitucci continued.
Prior to founding FlexFactor, Vitucci spent upwards of 14 years at Experian, including as the global managing director of Experian Decision Analytics. Meanwhile, Shoval is a serial entrepreneur who also had a stint working within Experian’s micro-lending group.
The “Factor” aspect of FlexFactor means that the startup will make payments on behalf of customers whose transactions it believes have been rejected in error. The company then spends 15 days trying to fix the payment issue before writing it off. Yet in an interview with Axios, Vitucci shared that it typically sorts out the payment within three days.
“The problem is so complex, so massive,” asserted Bessemer Ventures’ Charles Birnbaum. “There’s different types of merchants, [with] different types of risk profiles.”
“It’s a global opportunity,” said Birnbaum. “We definitely feel that a standalone company can be built here, especially one that is neutral and not exclusively tied to one payment service provider.”
Pictured at top of post: FlexFactor co-founders Elio Vitucci, CEO, and Ze’ev Shoval, CCO.
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