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Fighting Data and Payment Fraud with AI

Data processor in shape of security lockNew information shows that data and payment fraud haven’t decreased. If anything, the problem appears to be growing. The 2019 AFP Payments Fraud and Control Survey shows that 82 percent of companies were targets of payments fraud during 2018.

Other figures from the report also present some alarming statistics about data and payment fraud. Additionally, 80 percent of organizations experienced Business Email Compromise (BEC) that included scams targeted at checks and wires, while 70 percent of organizations experienced check fraud. That means that the cybersecurity protocols are not working as effectively as hoped.

Main Fraud Activity

There are some specific fraud approaches used by criminals that are impacting consumers, retailers, and the banking and payments industries:

  • Data breaches involve hackers who can break into a computer network and take customer records and data.
  • Card-not-present attacks leverage malware to steal payment card information and other customer data so criminals can use this to make purchases.
  • Transaction laundering involves hackers who use legitimate merchant accounts to undertake unauthorized transactions.
  • Criminals exploit the lack of knowledge about how security works to use phishing schemes to steal a business or individual’s account information to make purchases.
  • Cybercriminals target companies that have foreign suppliers or that use wire payments, including creating fake email addresses, to trick employees into participating in unauthorized wire transactions.
  • Businesses have to be wary of criminals who are posing as customers and using chargebacks -- also known as friendly fraud -- to get free products or services by requesting refunds on credit card transactions.

With so many types of fraud in use, other security solutions are clearly needed.

Check Out These 6 Cybersecurity Trends to Watch

Enter Artificial Intelligence (AI)

AI is computer science software that simulates human decision-making and actions by processing, organizing, and structuring data in a way that it improves over time. The software combines advanced algorithms and machine learning to progress what AI can do.

This technology is beginning to appear in more applications across processes and industries as an effective tool for processing, segmenting, and analyzing unstructured data faster than any human can in order to make quick decisions. Plus, AI can look at full data sets rather than the samples regular security software may use to assess fraud risk.

Since payments need to happen quickly on all channels to ensure a good experience for customers, it makes sense to think that AI can step in and handle that. Around the world, AI is now tapped as a tool to combat fraud across every payment channel -- from mobile payments and online transactions to ATMs and in-store purchases.

AI takes over the time-intensive work of fraud detection and identify verification, while also providing more accurate risk analysis about the types of future fraud that could impact a financial organization or a payments company. In this way, AI can beat the criminals at their own game, working smartly to continually update the algorithms it uses based on the new data it receives. Even if criminals change their tactics, AI is already assessing new behavior patterns in the real-time data.

AI in Action

There are many places where AI is already fighting fraud when it comes to money, transactions, and payments.

First, AI is part of the credit card industry. Mastercard led the way as one of the first payments companies to launch a solution with AI technology. Decision Intelligence™ leverages machine learning technology launched by Mastercard in 2017 to increase approvals for genuine transactions while identifying false declines and still delivering an exceptional consumer shopping experience.

According to Mastercard, the company has two billion credit cards across 210 countries and territories. This equates to processing 165 million transactions per hour. However, with the machine-learning algorithms it now uses, Mastercard can apply 1.9 million rules to examine each transaction in milliseconds to make rapid decisions.

Second, AI is helping banks now more than ever. For example, banks are using it for anomaly detection. This process is on the lookout for any behavior that is outside the norm for a particular customer and their bank account. This could involve larger or more frequent transactions or payments made in other parts of the world.

AI is also helping banks combat credit card fraud and loan application fraud. The technology analyzes the available data and looks for anything suspicious or different in behavior or the information provided during these transactions.

Advancements for an Evolving Technology

Although researchers predict that it will take a few more years before AI fully develops into a highly-capable solution, what little it can do now is already making a positive impact on the industries and applications that use it.

For More Business and Payment Tips FOLLOW OUR BLOG


BluePay is pleased to bring you this valuable information from, Due, makers of a free digital wallet that allows users to easily make and accept payments online.

Topics: Due.com Partner Posts, PCI Compliance and Fraud Prevention

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