Calgary-based online payment services provider Vogogo, a platform that automates payment processing, regulatory compliance and risk management for businesses, including clients in the bitcoin and digital currency sector, has raised $8.5m in new funding.
Speaking to CoinDesk, Vogogo CSO Rodney Thompson said that his firm has become more actively involved in the digital currency space, owing to the need of the industry's businesses for a partner that can handle fiat compliance and the associated fraud mitigation responsibilities that coincide with these offerings.
Thompson told CoinDesk that most of his firm's partners are digital currency exchanges that have turned to Vogogo to handle their risk management, know your customer (KYC), anti-money laundering (AML), fraud mitigation and dispute resolution needs, explaining:
Thompson indicates that Vogogo has become a valuable third-party partner that allows digital currency businesses to mitigate fraud in real time, without having to build in-house systems that meet this need.
Now, Thompson indicated, his firm is looking to build on this success to perform similar services to digital currency companies operating outside of Canada, adding:
Early market entrance
Thompson indicated that though Vogogo and its employees have had an internal interest in bitcoin for some time, as the company's CTO was an early and active bitcoin miner.
Despite the familiarity, it wasn't until the June 2013 closure of LibertyBit, then the second-largest exchange in Canada, that the company became convinced it could serve a real business need in the budding industry.
This development, as well as similar shutdowns from other major exchanges, pushed Vogogo to look more closely at the opportunity. After about three months of development, Vogogo tailored its offering to the digital currency space and began serving the market.
How Vogogo works
Thompson revealed Vogogo is currently working on a new product release that will allow it to handle KYC, AML and compliance requirements for digital currency exchanges.
"We [will] do the ongoing fraud mitigation. So, we will set the customer with their payment and all the ongoing fraud mitigation around it," Thompson said. "What that means is we'll manage all your bad debt, any fraud scenarios that happen, we manage all that."
Vogogo doesn't actually handle bitcoins or altcoins for its clients. Instead, Vogogo ensures that fiat payments are managed correctly, limiting its clients' risk for chargebacks and the other previously mentioned issues that come with the responsibility for customer funds.
Thompson added: "When an end user gets to that exchange to deal in bitcoin or altcoin, that's on the exchange. When they want to take whatever they've sold and move the fiat back into the currency of their choice, that's also on [the exchange."
No pivot needed
Thompson said that while Vogogo is happy to serve clients in the digital currency space, extending its services to this community doesn't necessitate a fundamental change in its business. Vogogo had historically served e-commerce platforms, and continues to do so.
Rather, Thompson indicated that all Vogogo needed to do was gear its existing offerings to the needs of the space while capitalizing on existing expertise.
When asked about potential upcoming digital currency regulation in Canada, the CSO said that this, too, won't require Vogogo to shift or change its product offering.
Expanding to new markets
As for the funding, Thompson indicated that it will be necessary given the company's desire to enter new markets in Europe and North America, especially owing to the expense of expanding a risk platform globally.
This expansion, Thompson said, will require Vogogo's payment solutions to be customized and integrated with domestic banks.
Images via Vogogo
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