MagicCube raises $15M to replace cybersecurity chips with software

MagicCube Inc. today announced that it has raised $15 million in funding to extend its software-based trusted execution platform, which the startup says can process sensitive data such as payment information more efficiently than the specialized chips historically used for the task. 

Mosaik Partners led the round. According to Crunchbase, the company had previously raised a total of $12.2 million over four rounds, though a funding of an undisclosed amount was raised in August 2020 from Visa Inc.

Many devices that process sensitive data come with a hardware component known as a trusted execution environment. It’s usually implemented as a standalone chip or as a module on a central processing unit. The trusted execution environment can run application code and process sensitive data in isolation from the other software installed on the device to which it’s attached, which prevents cyberattacks. Hackers can’t steal the data in the sandbox because they have no way of accessing it.

Santa Clara, California-based MagicCube has developed a software platform that provides trusted execution features without the need for specialized hardware. The startup says that the technology can be used in a variety of systems ranging from medical devices to autonomous vehicles. Initially, MagicCube is targeting retail use cases with a product called i-Accept that aims to replace in-store card readers and payment terminals. 

It’s estimated that retailers and banks spend billions of dollars a year on in-store payment systems. MagicCube says that i-Accept enables companies to accept payments using a smartphone app instead of specialized hardware, which lowers equipment expenses.

The cost reduction can be particularly valuable for smaller retailers. By lowering hardware expenses, i-Accept could help bring modern payment processing features to store operators for whom buying specialized devices is not practical.

MagicCube also promises benefits for large retailers. A major store chain with thousands of payment terminals throughout its locations has to keep the software on each system updated, replace devices when they malfunction and train employees how to use the hardware. The individual administrative tasks can add up to a significant amount of work. Replacing thousands of devices with software reduces maintenance requirements and, in the process, frees up the store space where payment terminals are normally deployed. 

Improved cybersecurity is another benefit of the technology, MagicCube says. The fact that i-Accept is a fully software-based product means that it’s easier to update than a large fleet of hardware devices. When a new cybersecurity threat emerges that requires a company to make code changes, developers can simply roll out an update over the air to the mobile devices used to process purchases.

According to MagicCube, companies can integrate the software into the apps they use to accept payments through an application programming interface. When a consumer makes an in-store purchase via an app powered by i-Accept, the platform processes user data inside a “virtual safe” designed to prevent cyberattacks. The virtual safe isolates user data from the other apps running on the mobile device and checks its own internal software components to ensure they were not compromised by hackers.

MagicCube will use its new funding to accelerate product development, with a particular focus on use cases in areas such as the auto sector and the cloud where there’s a need for tools that can process sensitive data securely. In conjunction, the startup intends to grow its sales and customer delivery teams.

Image: Magic Cube