FlexPay, a Montreal-based FinTech company that uses artificial intelligence (AI) and machine learning to aid merchants in recouping revenue lost from falsely declined transactions, has raised $6 million in a funding round, according to a release.
The round was led by Impression Ventures, with BMO Capital Partners, Anges Quebec and other strategic partners also participating.
According to credit card issuers, about 24 percent of recurring transactions from credit cards are falsely declined, which adds up to about $300 billion in lost sales in the U.S. alone.
When a transaction is falsely declined, the issue is usually completely out of the control of both the customer and the merchant. As more and more businesses are turning to cashless transactions and automatic recurring payments, the problem is likely to proliferate.
FlexPay analyzes transaction records by the billions to determine why they are being declined. It then uses the data to “optimize credit card recovery,” ultimately pushing the transactions through.
“Before learning about FlexPay, we didn’t know decline salvage firms existed, to be honest,” said President Noam Egosi of Masivo Media. “When we learned FlexPay’s fees are only charged on additional recovered customers, it was an easy decision for us at Masivo. I tell everybody that will listen to us, to use FlexPay. We’re big fans.”
Egosi said Masivo’s salvage rate went from 10 percent to 42.4 percent when it started using FlexPay, and that its lifetime value (LTV) increased by 12 percent and its profits lifted by 50 percent.
“2019 was a year of significant in-roads,” reflected Darryl Hicks, CEO of FlexPay. “We surpassed the two million declines-processed mark and multiplied our integration points eightfold, giving us access to a pool of $4 billion in annual declines, 40,000 merchants and 80 million end-customers. The next logical step was to invite venture partners to join us and add their capital and expertise to accelerate us to help billions of end-customers get their transactions approved.”