Cardpool (YC W10) Introduces Instant Redemption, Attracts Super Angels

techcrunch.com

80 points·anson··5 comments

Thus, with immediate, online transactions, the opportunity for fraudulent activity (i.e. the use of unauthorized credit cards to purchase gift cards) increases. In response to these security concerns, Tsai says Cardpool has devised a system to carefully monitor transactions and detect patterns.

Are there startups that provide this sort of fraud detection, the way Directed Edge does recommendations?

There are a few big companies that provide this service. I know of Actimize myself. http://en.wikipedia.org/wiki/Actimize

A company I worked for had a problem with chargebacks, so they now run the transactions by Actimize first, which will then give you a score of the likelihood it is a fraudulent charge. This gives a run down of how it works: http://www.actimize.com/index.aspx?page=solutionsfraudcard

If a small company wanted to compete with Actimize it would be difficult, since they have all of the historical data and, I believe, they can connect fraudulent accounts between merchants (e.g. amazon.com and paypal) so there is a network effect that creates a real barrier to entry.

AFAIK, every startup in the transaction business has had to build it themselves. I suspect it's hard to build without also running a transaction business, because you just wouldn't know what fraud patterns look like.

This is a great competitive advantage for cardpool.

I imagine gift card prices will increase since it's effectively a coupon for anyone ordering things online now.

Anyone have an idea how big this market is? Seems like the market for unused gift cards for which the owner cares enough to transfer the credit, and cares about waiting a few days, would be pretty small.

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