CreditorWatch founder and Australian serial entrepreneur Colin Porter has raised $ 3 million to launch his new fintech business, designed to prevent small businesses from falling victim to invoice fraud.
PayOK is a Software-as-a-Service platform for customers to quickly verify that the name on an invoice matches the account number, making sure they know they are paying the right person.
The startup is intended to prevent compromise of business email (BEC) or redirect scams, in which cybercriminals alter business account details, resulting in payments to the wrong person.
In the 12 months leading up to July 2021, more than 3,300 incidents of BEC were reported to Australian Federal Police, with financial losses totaling more than $ 79 million.
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That said, there is no obligation to report when something like this happens, Porter says. SmartCompany, and this is often an embarrassment for the company involved.
This means that the true extent of the problem is largely unknown.
The impact of these scams can be disastrous for businesses. In November of last year, the Sydney hedge fund Levitas Capital collapsed after mistakenly making $ 8.7 million in fraudulent payments, a mistake that led its largest institutional client to withdraw funds.
Every business faces the risk of this type of fraud, Porter says.
“Payment fraud is on the rise,” he adds.
“It can cause a business to collapse or significantly affect it. “
PayOK’s Global Goals
The oversubscribed round was led by Nightingale Partners. As PayOK operates in a highly regulated environment, a large portion of the funding will go towards ensuring secure systems and robust data protection.
The majority, however, are assigned to marketing, product development and customer acquisition, he says.
Beyond that, Porter is focused on rapid growth. While he has developed CreditorWatch slowly and organically, this time around he is focused on investing and growing rapidly.
It’s not a problem that only exists in Australia, he notes.
“It’s a global game. “
An “insurance product” against fraud for SMEs
The launch comes shortly after Porter also founded Avenue Bank, which recently obtained its Restricted Authorized Depository Institution (ADI) license.
It was while founding the bank and working with his team of bankers that Porter realized the magnitude of the challenge of bill fraud for businesses.
Banks are usually unable to match account names and numbers when processing payments, he explains. And once a payment has been made to the wrong account, banks aren’t required to collect it.
Big banks work with legacy systems, he explains, and this type of fraud is frankly not a priority for them.
There was a need for a solution here, and Porter set out to fill it.
There are also similarities between PayOK and CreditorWatch, he explains. Both are aimed at the small business audience, but where CreditorWatch focuses on credit risk, PayOK focuses on supplier risk.
PayOK is “almost an insurance product,” he explains. There is a good chance that companies will be targeted by scams like this one.
“How much damage is this going to cause when it happens?” “