How Mastercard's AI Boost is Set to Slash Payment Fraud by 60%
Written by: Alex Davis is a tech journalist and content creator focused on the newest trends in artificial intelligence and machine learning. He has partnered with various AI-focused companies and digital platforms globally, providing insights and analyses on cutting-edge technologies.
Mastercard's Innovative Approach to Combat Payment Fraud
Understanding the Growing Threat
As payment scams become increasingly sophisticated, consumers are left vulnerable to significant financial losses. Mastercard has recognized this alarming trend and is stepping up its game.
The rise of Authorised Push Payment (APP) fraud;
Recent enhancements to the Consumer Fraud Risk (CFR) tool;
Future strategies aimed at expanding consumer protection globally.
Top Trending AI Tools
In today's rapidly evolving technological landscape, there are many exciting AI tools making waves across various sectors. This month, we highlight the top trending AI tools that are shaping the way we interact with technology and enhancing productivity.
Mastercard's generative AI approach doubles detection rate for compromised payment cards, enhancing transaction security.
Prevent
New 'inbound risk' alerts show 60% improvement in detecting high-risk mule accounts, crucial for combating APP fraud.
Impact
UK consumers lost £460 million to APP fraud in 2023, highlighting the need for robust prevention measures and regulatory action.
Future
Expect global expansion of AI-powered fraud prevention solutions and continued integration of advanced technologies in payment systems.
PopularAiTools.ai
Growing Threat of APP Fraud
Authorised Push Payment (APP) fraud is becoming a pressing issue, often starting from deceptive online platforms, emails, or phone communications. In 2023, UK consumers suffered losses amounting to £460 million (USD $615 million) due to this type of fraud. The situation has garnered attention from regulators, leading to the implementation of new guidelines by the UK's Payment Systems Regulator (PSR), effective from October 7, 2024. These rules necessitate that banks reimburse victims of APP fraud in most instances.
Enhanced Consumer Fraud Risk Solution
Mastercard’s Consumer Fraud Risk (CFR) solution has been in place since early 2023 and leverages artificial intelligence to scrutinize numerous transaction data points. This innovative tool delivers a real-time risk score to a sender's bank, assisting them in recognizing and possibly preventing fraudulent transactions before they are finalized.
Utilizes advanced AI algorithms for comprehensive data analysis.
Real-time risk scores aid banks in making timely decisions.
Designed to stop fraudulent payments before they are executed.
New Capabilities for Identifying Fraudulent Accounts
The recent upgrades to the CFR system enhance its functionality for receiving banks. These institutions can now access risk scores in a matter of seconds, equipping them to recognize payments potentially linked to 'mule' accounts—accounts typically managed by fraudsters.
“Fraudsters have long sought to deceive the consumer through scam websites and fictitious deals. That's why, at Mastercard, we are turbocharging our technology, providing banks additional lines of defence – helping them better identify and stop scams in their tracks.”
Initial Outcomes and Future Aspirations
Mastercard reports promising early results from test implementations of the new 'inbound risk' alerts, showing an average 60% increase in banks’ abilities to pinpoint high-risk mule accounts early within their customer base. These developments coincide with data from the PSR, which indicated a 12% decrease in the overall value of APP scams, dropping from £389 million (USD $520 million) to £341 million (USD $456 million) throughout 2023.
Looking ahead, Mastercard aims to roll out its Consumer Fraud Risk solution in global markets within the year, to extend its consumer protection efforts and contribute to a more secure digital financial environment. The initiatives like Mastercard's CFR are likely to be instrumental in bolstering defenses against fraud.
“We are turbocharging our technology, providing banks additional lines of defence – helping them better identify and stop scams in their tracks.”
The introduction of Mastercard’s Consumer Fraud Risk solution followed the launch of Decision Intelligence Pro, a Generative AI tool designed for consumer protection, released earlier this year. This transaction risk assessment tool analyzes the connections between various entities related to transactions, exemplifying Mastercard’s commitment to safeguarding consumers.
Make Money With AI Tools
In today's digital landscape, there are numerous opportunities to generate income using AI tools. Whether you are looking to start a side hustle or expand your existing business, these innovative solutions can help you tap into new revenue streams. Below is a curated list of tools designed for anyone eager to explore profitable ventures with AI.
In 2023, UK consumers lost £341 million to APP scams, a 12% decrease from £389 million in 2022.
The volume of reported APP scam cases increased by 12% from 224,603 in 2022 to 252,626 in 2023.
The reimbursement rate for APP scam losses across the 14 largest banking groups in the UK increased from 61% in 2022 to 67% in 2023.
Historical Data for Comparison
APP scam losses in the UK more than doubled from 2021 to 2022, and then decreased by 12% in 2023.
In the US, consumers faced $10 billion in losses to scams and fraud in 2023, a 14% rise from the previous year.
Recent Trends or Changes in the Field
There is a growing use of artificial intelligence and deepfakes by fraudsters to enhance the believability of scams, leading to increased success in deceiving consumers.
Mobile fraud has increased 15% year-over-year since 2020, while desktop fraud has decreased by 5% over the same period.
The UK is introducing a new reimbursement regulation on October 7, 2024, which mandates equal responsibility for both sending and receiving banks in reimbursing customers in instances of APP fraud.
Relevant Economic Impacts or Financial Data
Global card-not-present (CNP) fraud losses are projected to grow to $28.1 billion by 2026, a 40% increase from 2023.
In 2023, digital payment fraud losses totaled $20 billion globally.
The total value lost to APP scams in the UK in 2023 was £341 million, with purchase scams accounting for 25% of losses by value.
Notable Expert Opinions or Predictions
Regulators and industry experts emphasize the need for stronger customer protection and the sharing of fraud-related information to combat APP scams effectively.
Mastercard’s Consumer Fraud Risk solution has shown promising results, with a 60% increase in banks’ abilities to identify high-risk mule accounts, highlighting the potential of advanced technology in fraud prevention.
Frequently Asked Questions
1. What is Authorised Push Payment (APP) fraud?
Authorised Push Payment (APP) fraud is a type of fraud that occurs when victims are deceived into authorizing a payment to a fraudster's account, often initiated through deceptive online platforms, emails, or phone communications. In 2023, UK consumers faced significant losses of approximately £460 million (USD $615 million) due to this fraud.
2. What regulations are being implemented to combat APP fraud?
The UK's Payment Systems Regulator (PSR) has recognized the seriousness of APP fraud and is implementing new guidelines effective from October 7, 2024. These guidelines will require banks to reimburse victims of APP fraud in most cases, enhancing consumer protection.
3. How does Mastercard’s Consumer Fraud Risk (CFR) solution work?
Mastercard's Consumer Fraud Risk (CFR) solution utilizes artificial intelligence to analyze numerous transaction data points. It provides a real-time risk score to the sender's bank, helping them identify and potentially prevent fraudulent transactions before they are completed. Key features include:
Advanced AI algorithms for comprehensive data analysis.
Real-time risk scores to aid in timely decision-making.
Designed to stop fraudulent payments before execution.
4. What improvements have been made to the CFR system?
Recent upgrades to the CFR system have equipped receiving banks with the ability to access risk scores within seconds. This enhancement enables banks to identify payments that may be linked to mule accounts, which are typically associated with fraudsters.
5. What impact has Mastercard seen from the CFR solution?
Initial implementations of the CFR solution have shown promising results, including an average 60% increase in banks’ capabilities to identify high-risk mule accounts. Additionally, PSR data indicates a 12% decrease in the overall value of APP scams in 2023.
6. What are 'mule accounts' in the context of APP fraud?
'Mule accounts' are bank accounts that are typically controlled by fraudsters, used to facilitate the transfer of funds obtained through fraudulent means. The CFR system enhances detection of these accounts, allowing banks to act proactively.
7. What are the future aspirations for the CFR solution?
Mastercard plans to expand the Consumer Fraud Risk solution globally within the year, aiming to further enhance consumer protection and contribute to a more secure digital financial environment. This initiative is expected to bolster defense mechanisms against fraud significantly.
8. How does Mastercard’s new risk assessment tool, Decision Intelligence Pro, contribute to fraud protection?
The Decision Intelligence Pro tool, introduced earlier this year, is a Generative AI tool for consumer protection. It analyzes connections between various entities involved in transactions, demonstrating Mastercard’s commitment to ensuring consumer safety against fraudulent activities.
9. What were the financial implications of APP fraud in 2023?
In 2023, the total losses to UK consumers due to APP fraud reached approximately £460 million (USD $615 million). This considerable financial impact has highlighted the need for intensified fraud prevention measures and regulatory oversight.
10. How is Mastercard tackling consumer fraud more effectively?
Mastercard is actively enhancing its technology to provide banks with additional defense layers. The commitment to “turbocharging” technology reflects efforts to better identify and halt scams before they affect consumers, emphasizing the importance of security in digital financial transactions.
.jpg)
.jpg)
.jpg)