Mastercard to acquire cybersecurity firm for $2.65B

Mastercard has announced the acquisition of Recorded Future, the world’s largest threat intelligence company, for $2.65 billion. This move reflects Mastercard’s increasing focus on safeguarding the digital economy amidst the growing threats posed by cybercriminals. The acquisition brings a powerful addition to Mastercard’s existing suite of security services, which already includes identity verification, fraud prevention, and real-time decision-making.

With the global cost of cybercrime projected to reach $9.2 trillion by the end of 2024, the need for sophisticated, real-time threat intelligence has never been greater. Craig Vosburg, Chief Services Officer at Mastercard, emphasized the strategic importance of the acquisition, stating, “Trust is the foundation of any relationship. This acquisition adds to how we deliver that greater peace of mind before, during, and after the payment transaction.”

The integration of AI-powered analytics into Mastercard’s cybersecurity framework represents a pivotal shift in how threat intelligence is leveraged across global digital ecosystems.

The AI-driven technology enhances the real-time ability to detect and mitigate threats by analyzing vast quantities of data points from diverse sources. The platform employs advanced machine learning algorithms to synthesize and interpret billions of data points, enabling it to detect anomalies and predict potential attacks. By constantly monitoring a global array of digital environments, it offers real-time intelligence on everything from malware patterns to geopolitical risks.

This is not the first time Mastercard and Recorded Future have joined forces. Earlier in 2024, the two companies collaborated to launch an AI-supported service that alerts financial institutions when a payment card is likely compromised. Since the service’s inception, Mastercard has doubled the rate at which compromised cards are identified.

The acquisition is part of a broader strategy by Mastercard to expand its cybersecurity footprint. In recent years, the company has made several high-profile acquisitions in the field, including CipherTrace, a blockchain analytics firm, and Ekata, a digital identity verification provider. This acquisition also has broader implications for the financial industry, particularly as cyber threats evolve with the increasing adoption of new technologies.

Financial institutions have long been prime targets for cybercriminals, and the integration of Recorded Future’s threat intelligence capabilities will offer better protection not only for Mastercard’s clients but also for the wider financial ecosystem. Cybersecurity has become increasingly important in the age of digital payments for all companies operating in the ecosystem.

Mastercard boosts digital security measures

Identity theft, imposter scams, and online hacks have made safeguarding customers’ credit and debit card credentials more difficult and more critical. Analysts who follow the card network expect the Recorded Future purchase to strengthen their business. “We see the Recorded Future deal bolstering Mastercard’s competitive advantage,” analysts at the financial firm William Blair wrote in a note to their clients on Thursday.

Mastercard CEO Michael Miebach mentioned recently providing such services to London-based neobank and fintech Revolut during a presentation. He also referenced how the card network is using AI to enhance its cybersecurity services. Recorded Future has about $300 million in annual revenue and 1,000 employees.

The fintech is led by CEO and co-founder Christopher Ahlberg, who has been with the company since its inception in 2007. “We will remain an independent and open intelligence platform, operating as an independent subsidiary of Mastercard,” Recorded Future stated. The Recorded Future deal, which is expected to close in early 2025 pending regulatory approval, is the latest in a series of investments in artificial intelligence and other emerging technology.

These investments aim to thwart payment and financial services fraud by accessing more data from a growing number of sources. Johan Gerber, executive vice president of security solutions, stated, “For most interactions in a digitally connected world, payments are interjected into the process. So you have to go beyond the transaction to combat fraud.

Cybersecurity is one of the biggest threats.”

Fraud is always evolving with new payment technology innovations, and financial service providers and fintechs need to stay one step ahead of the fraudsters to keep their customers protected. Leveraging advanced AI and analytical tools from Recorded Future is a way of doing just that. The payments and financial services industries face an elevated security threat that could create headwinds for other innovation.

Consumers reported $5.4 billion in losses due to financial services fraud in the first half of 2024, compared to the $4.9 billion in the first half of 2023, according to the Financial Crimes Enforcement Network and the Federal Trade Commission. By 2026, 80% of financial institutions plan to use generative AI, with the top areas of focus being fraud prevention and customer services, according to research from Arizent. This comes as more financial institutions embrace real-time payments and mobile wallets, which heighten the risk of fraud given the shorter detection time.