Bolt is a B round fintech startup, providing an end-to-end checkout, payment and fraud solution. It was founded by Eric Feldman and Ryan Breslow in Feb 2014, and recently has closed a $68mm series B funding co-led by Activant Capital and Tribe Capital, bringing the total amount raised to $90mm.

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The Founders

Eric Feldman graduated from Stanford with CS and Economics major, and left the CS master half way through. He has spent four years during 2007 to 2011 creating various startups and failed. 🙂

Focus in education, enterprise software, microlending. Made lots of mistakes. Learned a lot.

Eric’s LinkedIn

Ryan Breslow is also a stanford alumni, graduated with CS major as well.

The Goal: Perfect online checkout experience

Bolt was created with one simple but ambitious goal: to perfect the checkout experience for online retailers and make sure nothing gets in the way when shoppers decide to buy.

I believe most of the data analyst should have done the funnel analysis, by calculating the conversion rate, and detecting which step we lose the most volume. With that, if a customer who wants to do online shopping, he/she typically would go through four steps: (1) Visit the website, (2) Check product page, (3) Like it and add to cart, (4) Checkout.

ecommerce-conversion-funnel-2

Among those four steps, online checkout is usually the very last step with 3.3% customer left ( but they are all highly interested customers and ready to pay!). With the nature of complexity ( transactions/many counterparties/customer gets impatient/etc..), checkout often to be the most important and annoying step. Bolt steps in, and dedicates all their knowledge and resources to tackle this single problem, which makes perfect sense.

Another critical feature bolt claims to have is fraud detection, which enable them to provide a holistic approach to checkout, and seamless user experience.

Previously, retailers had to patch together several solutions to power their sites’ buying experience. The result was complex tech stack that required significant upkeep and operational overhead. By combining all checkout, payments, and fraud detection under one hood, we’re able to power a better buying experience for shoppers and maximize conversion for retailers, helping them to better compete with Amazon and other retail giants. 

One of my thinking of fraud is what exactly bolt is doing comparing what banks are doing on fraud. A simple assumption would be, since Bolt/Intuit/other payment startup still need to go through typical transaction channel say SWIFT/ACH/WIRE, their fraud detection process should happen before the money send through credit/debit bank, and bolt will recover client’s loss if they fail to detect the fraud.

Competing edge

Bloomberg published an article “The Race to Become the Next Stripe, PayPal or Square Heats Up” early this year, and quote a few upstarts like Bolt, Toast and Due. The key arguments are, new entrants are finding their own niches and grabbing the shares of the Big Four (Paypal/Square/Adyen/Stripe); and they all become a good acquisition target given lots of big player(banks/retail company) want to enrich their payment business or place a sky strategic initiative.

Invicta, a watch seller with 60 physical stores, started using Bolt for online checkout four days before Black Friday of 2017. The retailer says the number of visitors who bought something rose 30 percent, while shoppers who completed a purchase more than tripled to 32 percent. What’s more, 12 percent more payments were approved than before. 

More than that, the article mentioned that the new payment method can boost the bottom line so significantly that retailer would kill for it. Especially during the holiday season when they have large volume, they want to have the best or at least the same seamless checkout experience as the big retailer like Amazon.

Key Features

I found a good article list the three key features that bolt bundle them together:

Faster Checkout

Thanks to its advanced fraud detection tools, Bolt reduces your customers’ manual input when they’re checking out—for example, Bolt’s checkout process requires your customers to fill fewer fields, like their billing address, in order to complete an online order. You can also provide your customers with the option to register for an account after they’ve completed their order, which drastically increases checkout fulfillment rates. In fact, one Bolt Payments case study found that Invicta, a major watch company, saw a 153% boost in their checkout conversion rate after switching to Bolt.

Bolt Payments also provides a virtual terminal so merchants can accept payments on their computers or phones, without needing external card-reading hardware. Its interface is also optimized for mobile—an extremely useful feature, as more than 50% of consumers now shop on their phones.

Also, Bolt currently integrates with major shopping carts including BigCommerce, Drupal Commerce, Magento 1, Magento 2, Prestashop, ShopifyVolusion, and WooCommerce.

The final purpose of faster checkout is to increase to conversion rate, and fuel the sales as much as possible. To provide a faster and seamless payment experience should be a critical pain point of small e-commerce shops who are suffering from their shaky and slow payment platform.

Advanced Fraud Tools

One of Bolt Payments’ most unique features is their advanced fraud technology. Bolt’s risk tools, developed by their in-house team of engineers, analyzes tons of data points within each transaction. With more available data, Bolt can accurately detect fraud when it does occur, and eliminate the risk of erroneously declining legitimate transactions. Although their technology is powered by machine learning, Bolt’s (human-powered) risk team reviews any suspicious activity their technology detects. That’s unlike most fraud tools on the market, which are purely algorithmic and often lead to blocking good transactions.

Bolt is also the first payments platform to provide 100% fraud coverage, meaning that they’ll handle and cover all fraud-related chargebacks from credit card companies. That’s a welcome change from typical payment processes in which the merchant is responsible for these charges—which generally range between $15 and $20 per fraudulent transaction—and sometimes require merchants to sink hours into fighting false positives with their payment processor. Bolt’s risk coverage applies to both domestic and international transactions, too.

Fraud detection and recovery is the key for all payment related business (credit card payment/corporate payment/peer-to-peer small payment). Usually the merchants are in the disadvantage side when encountering the fraud, especially without having a fraud service from payment platform. Apparently that is a key point if payment platform could provide the fraud detection and a fraud guarantee service.

Dive the fraud issue into a little bit more details, roughly there is a waterfall process in the chain of payment to detect the fraud. Taking an e-commerce payment as an example, the first line of defense is the merchant or their payment system, by detecting any suspicious payment initiation. The second line of defense would sit in the bank/credit card company, when the transaction pass through the merchant and require bank to proceed the payment. Having said that, Bolt may not be the only passenger on the “100% fraud coverage” boat, the bank/credit card company may also play a role to safeguard the process.

Also, per what is mentioned above, it is tricky to manage a large number of false positive (may slow down the payment) with high accuracy when detecting the fraud. Even though credit card fraud detection is more advanced (compare to corporate transaction fraud detection), I think Bolt is doing a good job, by finding a balance and providing this very competitive service.

Merchant Dashboard

On Bolt’s centralized dashboard, merchants can track and manage important data about transactions and customer behavior. You can then export that data into analytics reports to keep for your records or use it for accounting purposes. On the dashboard, you can also review and force approve any transactions that Bolt’s risk team flags as fraudulent. And if you run into any problems with your Bolt Payments service, you can contact a customer support representative via live chat, email, or phone 24/7.

That’s straightforward, and easy to have.

Summary

Bolt itself is doing a pretty good job by finding its own niche (providing end-to-end checkout, payment and fraud solution), targeting a specific customer segment ( online retailers that do seven to nine figures in annual sales volume), and distinguishing other big competitors (100% fraud coverage, single integrated platform). And no wonder they got a big B round funding in a short period of time :).

However, the challenge would still exist, one is how to approach big companies (say Uber/ Postmates..), which have more engineers and higher volume and customized requests. The other would be how to expand its volume and get more market shares.

We’ve reached an annualized payment processing volume of more than $1 billion, conducted more than 1.5M transactions through the platform

Bolt’s annual payment volume is still tiny.

My future view would be, the payment area, specifically for customer to business payment or p2p payment, the battle has began. The big four acquire ~80% of the transaction volume but they won’t dominate the market . More and more players will come in and find a lucrative demand point and stick to it. More large corps want to do something in this area but it is such an agile and fast changing space that only the player who can provide the best/most competing service will become the winner.

Different from what has happened in China, Alipay and Wechat pay have burned tremendous amount of money to educate the customer and develop offsite payment scenario. US is a little bit behind the curve, or I would say US and China are two paradigms. The smart people in US decide to stick to online transaction area rather than follow the trend of what is happening in China.

Reference:

Disclaimer: Opinions are my own and not the views of my employer

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