How are Hokodo customers protected against risk?

Richard Thornton
Co-Founder and Co-CEO

When communicating with potential clients about our B2B Buy Now, Pay Later solution, the Hokodo sales team are often asked questions such as:

  • How are your customers (i.e., merchants) protected against fraud and risk?
  • What happens if my customer doesn’t pay you?
  • Am I protected against nonpayment and debt?
  • If Hokodo goes out of business, am I at risk of losing any money?

We understand why you might be uncertain about offering payment terms to your e-commerce customers – after all, it’s a process that naturally carries risk of nonpayment and fraud. Business founders and finance department leaders may be particularly worried thanks to a heightened awareness of how late and missed invoice payments can impact SMEs.

As the leading provider of B2B Buy Now, Pay Later solutions in Europe, we have a battle-tested set of credit and fraud risk management processes in place to protect you, your business and your finances. Read on for more information on how these processes work.

We’re backed by SCOR and Lloyd’s of London

All of Hokodo’s solutions are backed by Lloyd's of London and underwritten by SCOR Syndicate 2015, SCOR SE’s corporate syndicate at Lloyd’s of London. In the UK, Hokodo is a Lloyd’s coverholder, authorised by the Financial Conduct Authority as an Appointed Representative of Innovative Risk Ltd. In Continental Europe, Hokodo SAS is registered as an insurance intermediary (number 19001909 by France’s ORIAS).

This means that Hokodo provides the technology and the credit decisions that you need to operate your business. Hokodo benefits from a DUA (Delegated Underwriting Authority) from Lloyd’s which allows us to make credit decisions for your benefit while being insured in the background by Lloyd’s against the risk of non-payment.

We have a separate pot for merchant financing

The funds we use for merchant financing – i.e., the money we use to pay you upfront – are in a segregated special purpose vehicle (SPV). We don’t use this cash for our own financing or outgoings, allowing us to service the obligations of our contract with you and your buyers even if we go insolvent.

Our underwriting capability is market leading

Hokodo’s market leading underwriting capabilities help us to identify risky or fraudulent customers, preventing them from gaining access to our Buy Now, Pay Later solution. We also have credit and fraud analyst teams to conduct more in-depth manual reviews as appropriate (e.g., on very high value orders). 

This process minimises the risk that Hokodo and your business is exposed to.

We bear responsibility for all risk

If you've selected our financing solution, then on the off chance that a fraudulent order slips past our risk management team or one of your customers is unable or unwilling to pay for their purchase, Hokodo assumes responsibility for all risk. In the event of nonpayment, we will also handle the collections process.

This means that you get paid regardless of what might happen outside of your control. So long as you comply with our merchant protection programme (e.g. shipping to the address we approve etc.) then the only occasion on which we will attempt to claw back funds from you is when there is a commercial dispute related to the goods or services.

We’ve recently completed a large fund raise

It’s been less than a year since we announced our $12.5 million Series A fund raise in June 2021. With this financial backing, a market leading reputation and a rapidly growing team, there’s very little chance of Hokodo going belly up anytime soon – and even if we do, the risk management processes detailed in this article mean we won’t go down with any money owed to you or your customers.

Still got questions about how Hokodo customers are protected against risk? Book a demo today and a member of the team will be happy to provide the information you need.

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