Posted February 10, 2022

I am excited to announce our investment in Sardine – aptly named for the “fishy” behavior this company will prevent. Sardine provides instant, risk-free ACH & card settlement to fintech and crypto companies enabling them to stop payment fraud and increase conversion rates.

The onboarding struggle

Every company with a payments component faces the same problem: the momentum-killing wait time between when the customer transfers money to your platform and when they can actually use that money on your service to transact.

This funding delay is a pervasive frustration for many companies. You succeed in doing the hard work to attract a new user to your company (a task that is getting increasingly expensive). This new customer wants to use your product. They sign up with a username and password, link their bank account, and transfer their money into your wallet (a neobank, a crypto wallet, an NFT platform, etc.) so they can make a purchase on your platform. Your new user is ready to go!

…but you are not. Due to the time it takes for funds to clear — often three days or longer – you might have lost all momentum with your new customer. And given all this, maybe they don’t even bother initiating the transfer at all.

Payment risks

As a company accepting payments, this payment acceptance delay has long been a necessary trade-off to mitigate common risks.

  • Risk 1: Non-sufficient funds (NSF). When your user transfers $200 to your wallet, you could do a balance check to see if there are sufficient funds at that moment, but by the time your ACH pull request goes through — hours or even a day later — there may not be sufficient funds. You are potentially out $200!
  • Risk 2: Fraud. Your user transfers $200 to your wallet. Here the malicious vectors are many: The user may not be who they claim they are (identity fraud); the user may have taken over the account of a real user (account takeover); or the user may be using a stolen card or bank account. When discovered, the real user or bank/cardholder can call their bank, rightly dispute the charges, and you are again out $200.

The complexity of issues speaks to why most companies *still* make users wait until funds clear before letting them transact, even at the risk of a poor user experience or worse, customer attrition.

Sardine’s solution

Sardine provides risk-free, instant settlement for ACH and cards. Unlike other point solutions, Sardine’s comprehensive KYC, fraud, and compliance platform provides a holistic view of the user, from onboarding through to transaction monitoring.

The founders of Sardine are uniquely suited to take on this growing opportunity. Sardine’s CEO Soups Ranjan has spent his career in risk and fraud: He ran data science and risk at Coinbase as it grew transaction volumes by 1,000X.  Along the way he deepened his network and expertise by founding Risk Salon, a think tank for people working in risk, trust and safety, and compliance. He then moved to Revolut where he met his cofounders, Zahid Shaikh and Aditya Goel. Zahid led product for Revolut’s crypto efforts (and also brings deep expertise in fraud from his time at Uber and PayPal), while Aditya managed Revolut’s expansion into North America.

We are thrilled to partner with Sardine on their mission to stamp out payment fraud for fintech and crypto companies.