This Forbes article continues the press obsession on Artificial Intelligence used to detect fraud, yet fails to identify how Mastercard uses AI for authentication (Fingerprint activated card and Selfie Pay), is used for device fingerprinting and soon behavioral fingerprinting, related to 3D Secure 2.0. These are just the obvious applications for AI, it is likely that Mastercard is also implementing AI for dispute management, loyalty marketing, merchant onboarding, and perhaps even collusion detection. These and many other applications for AI in financial institutions is documented in Mercator’s upcoming publication “80+ Ways Banks Use AI Today.” As these numbers indicate, while the press focuses on AI in payments, large financial institutions are deploying it across every functional area, not just in payments.
“Having a card transaction declined at the checkout can be a frustrating and embarrassing occurrence. So much so that it can seriously damage brand loyalty – according to research by Mastercard, a third of us have withdrawn our custom from a retailer due to our cards being refused.
Often this is due to the transaction being incorrectly flagged as fraudulent in some way – the algorithms which make the call on whether a payment is valid have erred on the side of caution, and sometimes they get it wrong.
Aside from the inconvenience it causes us, the cost to businesses and the wider economy of these false declines is around $118 billion – an amount 13 times higher than the cost of actual card fraud.
But fear not because, once again, AI has come to the rescue. Through its Decision Intelligence and AI Express platforms, Mastercard has used predictive analytics powered by machine learning to cut the rate that this happens by 50%.
I had the chance to speak to Ajay Bhalla, the company’s president for global enterprise, risk and security, about how this technology works and how AI is now helping Mastercard achieve more of its strategic objectives.
Real time analytics means more accurate results
Bhalla tells me that the quantum leap in the ability to both detect fraud and reduce false declines has come about through its acquisition of California-based artificial intelligence specialists Brighterion.
Technology developed with Brighterion has enabled it to move to analysing data in real time. Machine learning algorithms must be incredibly efficient to handle the 75 billion transactions per year happening at 45 million global locations, which are processed by the Mastercard network.
You can view the rest of the Forbes article here
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group