Israeli predictive artificial intelligence fraud protection startup nSure.ai Ltd. announced today it has raised $6.8 million in new funding to develop its AI and machine learning algorithms further.

The seed round included DisruptiveAI, Phoenix Insurance, Kamet – an AXA-backed venture builder — Moneta Seeds and private investors.

Founded in 2019, nSure.ai applies advanced AI technology to provide merchants insurance-backed fraud detection for digital goods. The service was developed specifically for high-risk digital good sellers such as electronic gift cards, airline tickets, concerts, sports tickets, money transfer apps, hotel vouchers, software, games and others who suffer from high rejection rates, losing safe sales and good customers.

The problem the company is attempting to tackle is the difference between sellers of physical goods and digital goods. Physical goods have warehouse processing times to double-check charges and can withhold a shipment if needed, but digital sellers lack this buffer. With a digital good, even if fraud is detected minutes later, the assailant is often untraceable, leaving sellers to absorb chargeback fees.

NSure.ai’s founders, Alex Zeltcer and Ziv Isaiah, set up the company after experiencing firsthand the challenges faced by retailers of digital assets. Both previously ran a gift card business where, in its first week of operation, 40% of sales were fraudulent, resulting in chargebacks. The pair initially turned to fraud detection solutions from the physical goods business but realized that those solutions did not meet their needs.

The company’s service is claimed to reduce fraud rates to only 2% of transactions, compared with an industry standard of 15% to 20%. Its 98% approval rate is said to reflect a more accurate fraud-detection strategy, allowing retailers to recapture nearly $100 billion a year in revenue lost by declining legitimate customers, according to Chief Executive Officer Zeltcer.

NSure.ai has seen strong growth in its two years, currently monitoring and managing millions of transactions every month, and has approved close to $1 billion in volume since going live.

“This investment enables us to register thousands of new merchants, who can feel confident selling higher-risk digital goods, without accepting fraud as a part of business,” Zeltcer added.

Image: nSure.ai