Ever had your credit card declined because of a false positive fraud alert, just when you are trying to impress someone? It’s fairly common, and in the US it is reckoned that lost business due to these false positive costs businesses more than 13 times the amount lost to fraud. So Mastercard has moved on from the static rule based systems that dominate fraud detection systems, to the use of dynamic machine learning based systems. It’s an interesting development, since static scoring has been around for decades. The press release is below:
Mastercard has introduced Decision Intelligence, a comprehensive decision and fraud detection service. The solution uses artificial intelligence technology to help financial institutions increase the accuracy of real-time approvals of genuine transactions and reduce false declines.
This is the first use of AI being implemented on a global scale directly on the Mastercard network.
Current decision-scoring products are focused primarily on risk assessment, working within predefined rules. Decision Intelligence is a radical new approach that goes much further. It takes a broader view in assessing, scoring and learning from each transaction. That score then enables the card issuer to apply the intelligence to the next transaction.
“We are solving a major consumer pain point of being falsely declined when trying to make a purchase,” said Ajay Bhalla, president of enterprise risk and security, Mastercard. “By using AI technology on our global network, we’re helping financial institutions and merchants improve approval rates – and the consumer experience.”
How It Works
Building on other proprietary services, Decision Intelligence is a new way of solving an old problem using sophisticated algorithms to provide a predictive score to the issuer, based on intelligent analysis. They then incorporate that information into their existing fraud mitigation efforts. Alternatively, issuers can activate the holistic Mastercard tool, which makes data-driven, real-time decisions tailored to the account, including defined alert and decline thresholds.
The smart technology behind Decision Intelligence examines how a specific account is used over time to detect normal and abnormal shopping spending behaviors. In doing so, it leverages account information like customer value segmentation, risk profiling, location, merchant, device data, time of day, and type of purchase made.
Delivering Value in Every Tap, Dip or Swipe
Over the last few years, the industry has been increasingly focused on protecting payments and combating fraud, which is why striking the right balance in approving transactions and managing fraud is important.
“We estimate that in the U.S. alone, the value of false declines is more than 13 times the total amount lost to actual card fraud,” said Al Pascual, senior vice president, research director and head of fraud and security at Javelin Strategy & Research. “Applying machine learning to decision-scoring is a new way of creating a positive consumer experience, while also minimizing fraud.”
The addition of AI as a core component of the Mastercard network will deliver an enhanced fraud score for every transaction. This new functionality can help improve the accuracy of real-time approvals of genuine transactions and reduce false declines. In specific verticals, like fuel or ATM, the information could be used in real-time to react to potential concerns much quicker, reducing operational expenses like chargebacks.
This technology is a core feature on the enhanced World Elite platform and it also supports all Mastercard brands and products across all markets.