American Express Buys InAuth To Boost Digital Security

With continued focus on fraud prevention in e-commerce, American Express Company (NYSE:AXP) acquired Boston, MA-based mobile device authentication and intelligence solutions provider, InAuth, Inc.

American Express, as part of its fraud management capabilities, already uses InAuth’s technology. The latest acquisition follows an investment in InAuth, made earlier this year, by a strategic investment wing of American Express.

InAuth, founded in 2011, helps clients in identifying risks and reduce fraud in their digital channels. Its device authentication technology facilitates clients to evaluate the potential risk tied with varied digital transactions, including customer logging into their account on web browser or a mobile app or purchasing from a merchant’s website. Several large financial institutions, payment networks, banks and merchants use InAuth’s technology.

In its release, American Express highlighted that with increase in online transactions, risk of fraud has also increased. The NY-based company noted that the acquisition not only complements and boosts its data analytics and fraud prevention capabilities, but also well positions the company to tap opportunities as more consumer activity (from payments to account origination and servicing) shifts to digital channels.

American Express shares have gained 4% year to date, outperforming 2.4% growth for the Zacks categorized Miscellaneous Financial Services industry. Though the company remains well poised for growth on the back of its solid market position, strength in card business and significant opportunities from the secular shift toward electronic payments, some of the key concerns include high loan loss provisions and intense competition.



American Express carries a Zacks Rank #3 (Hold).

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