Last week we announced our investment in Rivero, a Swiss fintech that has built SaaS solutions for card dispute management, fraud recovery and payment scheme compliance.
Rivero is targeting a multi-billion problem which is largely unserved. The team has managed to sign up 20+ banks, turn profitable and deliver millions in revenues with just CHF 600k in Seed funding. Thereby demonstrating a clear product need and a customer value which is high enough to make banks move uncharacteristically fast. Above all, it showcases the immense execution power of the very special founders behind Rivero.
Now that the buzz around the raise has settled, we wanted to offer a deeper dive into the investment case.
Processing card payments is hard work for banks
Card payments are quickly becoming the preferred method of payment in Europe. While cards were used in less than 20% of point-of-sale transactions in 2016, this has grown to 49% today. Cash is no longer king.
The growth in card usage can be explained by several factors, including the roll-out of card payment infrastructure (most shops have a card machine now), the emergence of contactless payments (which account for 60% of all physical card transactions) and the growth of e-commerce.
Most card payments are simple to process, the payment goes through and there are no issues. However, it gets complicated in the <1% of cases where payments are disputed. This happens, for instance, because a transaction is fraudulent, because products are not delivered (or are defective), or because a subscription is cancelled but still gets charged.
Solving disputes is a manual and costly process. A bank employee must collect all relevant information from the merchant, the card network and the customer (many of us have received a call from the bank at some point to inform us of a suspicious transaction). This information is then used to evaluate the dispute and take corrective action, from blocking and replacing the card to reversing or reimbursing the payment.
Banks spend billions each year on card dispute management. Even a small bank can easily have a team of 30 employees handling disputes. Moreover, the corrective process is complicated, as different card networks (Visa, Mastercard, Bancontact, etc.) have different rules in different circumstances.
Visa’s rulebook, for instance, is 941 pages. How disputes are handled varies based on the nature of the transaction, the country in which it took place, the card authentication method used, etc. The rules are updated frequently, sometimes daily, as card usage evolves and the sophistication of cybercriminals grows.
E.g. a recent Mastercard rulebook update included changes in 10 different areas spanning from existing markets (in this case the use of cards in online gambling and digital currency transactions), the launch of new Mastercard products, and updates to pricing. To remain compliant, these changes required action from 9 different bank departments.)
Rivero reduces the burden on banks
Rivero offers a suite of SaaS solutions to help banks and payment processors with fraud recovery, dispute management and payment scheme compliance. Essentially, Rivero turns a costly manual process into a seamless, digital experience.
Kajo makes card scheme compliance manageable
The first product Rivero launched is called Kajo, a software platform that makes it easy for banks to stay compliant with the different rulebooks. It tracks and centralizes all rule changes, breaks down what actions need to be taken, organizes task management, etc. In essence, Kajo minimizes the effort and risk involved in remaining compliant with the card schemes.
Launched in 2020, Kajo found strong traction with customers in a short time. It is already used by more than a dozen banks and new customers are added every other month. Kajo was first rolled out in Switzerland and has since expanded sales to Austria, France, the Nordics and the UK. Adopting Kajo is a no-brainer for banks, as it requires no technical integration and costs a tiny fraction of what banks are currently spending, a small price to reduce a big headache.
Most banks have no software in place to manage this process, it’s still manual and people-driven. The rapid growth in card payments (and therefore also disputes and rule updates) is fueling demand for a digital compliance solution and most customers are now signing long term contracts with Rivero.
Amiko automates dispute management
Rivero’s second product, Amiko, digitizes the entire fraud recovery and dispute process. An AI chatbot collects details of a customer’s dispute from within their banking app. Claim investigation is automated through APIs with payment networks and other banks. And the system handles card blocking, replacements and repayments.
Banks that use Amiko are able to resolve 80% of disputes without any human involvement, offering a huge cost saving. Moreover, it empowers banks to promote consumer protection without having to be concerned about handling increasing volumes and costs. And it improves the customer experience, as simple cases are resolved fast without long telephone wait times, while more complex disputes receive more personal attention.
Amiko was launched in 2023 and has quickly conquered its inaugural Swiss market, generating millions in revenues in year 1. Amiko customers include both banks and payment processors, and together they represent 80% of Swiss market volumes. As with Kajo, contracts are long term.
Rivero’s products are complementary, and financial institutions that sign up to use one frequently end up using both.
Conquering an entire market within a year of product launch demonstrates that there is a product need, that the value for the customer (bank) is high enough to make them move uncharacteristically fast, and that they did not have anything in place before.
Strong traction and sales metrics
Rivero generates strong revenues from both products, and has even caught the attention of the card networks themselves. Visa offered Rivero a partnership to help them scale internationally, making them the first Swiss Fintech to enter the prestigious Visa Fintech Partner Connect Programme.
We are not only impressed with the absolute numbers at this early stage, but also by the capital efficiency with which they have been delivered. The company reached millions in revenues with just CHF 600k in seed capital and an extremely lean team.
The capital raised in this round will help Rivero to grow the commercial team and expand both Amiko and Kajo internationally.
Long-term growth opportunity
Banks see disputes as a burden imposed on them by the card networks and are keen for a solution that helps reduce the headache they bring. Similarly, payment processors get paid for successful transactions and want to minimise time spent on unprofitable disputes. So every player in the card payment value chain is a potential client, from the banks (both acquiring and issuing) to payment processors and payment service providers.
This adds up to 5,000 potential clients in Europe alone, and Visa is now unlocking the US for Rivero as well. The fact that the same rulebooks are used globally makes it relatively easy to scale the product across geographies, which is quite rare within Fintech. The opportunity is big, and the competition is slim to non-existent.
Amiko is the most lucrative opportunity for Rivero, but Kajo is important too. Offering a robust software program that replaces email and spreadsheets in compliance management is an easy sell. Kajo provides a quick foot in the door with banks, and it cements Rivero’s reputation as a leader in card scheme compliance.
An impressive team with hands-on experience
CEO Thomas Müller was previously Chief Information Security Officer at Aduno Group, one of the largest payment processors in Switzerland.
Co-founder Fatemeh Nikayin, who heads sales, worked as a consultant in the payment industry and holds a PhD in technology management.
Management’s experience in the industry has resulted in an intimate understanding of the problems that banks face in dispute management. They noticed that there are not many solutions to the problem, a few legacy on-premise software packages in the US, but no modern SaaS solution. More importantly, there are no solution providers in Europe.
Management has not only impressed us with their knowledge and vision, but also with their execution. Launching and scaling two banking-grade products in just a few years with a bare-bones commercial team is genuinely impressive. The team oozed quality throughout our due diligence process and the feedback on reference calls was outstanding.
6DC III led a $7m round in Rivero alongside Inference Partners, with participation from Kraken Ventures, SeedX and PostFinance.
We are thrilled to join Thomas, Fatemeh and Stephan, along with the rest of the Rivero team. We can’t wait to see where this journey goes next!
Here at 6DC, we love investing in Fintech and SaaS companies across Europe from Seed to Series B. We believe in disruptive technologies addressing real customer pains. Quality businesses that scale exponentially and are led by extraordinary entrepreneurs. If that sounds like you, please get in touch here.
If you want to read more investment cases from 6 Degrees, read why we invested in Superhog here.