For the past several years credit card processors and retailers have worked to implement EMV chip cards and payment terminals in an effort to reduce fraud. Although EMV or “chip cards” have been seen as a significant improvement for reducing fraud, the implementation has not eliminated fraud. In fact, statistics show that online fraudulent transactions have increased while in-store purchases have decreased as a result of EMV implementation.
With the continuing development of Artificial Intelligence (AI), a new weapon is being deployed to help reduce fraud. It’s called “machine learning” technology. The technology is largely being deployed within virtual assistant devices such as Amazon’s Alexa. While seen as a customer convenience application, AI is also playing a large part in providing analytical data capabilities to fight fraud. Using AI, machine learning computers can train themselves and apply data without human intervention.
At the present time, humans constantly analyze patterns likely to indicate fraud. The increase of online transactions means those human teams must be expanded to review millions of transactions each day in an effort to detect fraud. It has basically come to a point where the volume of transactions exceeds the ability for human oversight.
AI allows computers to analyze massive amounts of data and react faster than humans can react to the data. The new technology learns from each new situation and data set to help lower the losses from new fraud threats. New products implementing AI technology are already being implemented on a test basis and Chosen Payments will continue to monitor the developments of AI to protect our merchants from fraudulent transaction losses that merchants may be forced to absorb. The AI technology is predicted to analyze every transaction in real time and compare the data to many things such as previous consumer purchasing trends and the physical location of the computer being used to place an online order.
MasterCard was the first card issuer to launch an AI based tool called, Decision Intelligence. Decision Intelligence turns thousands of data points about a given account into one decision score to help issuing banks make a more informed decision at the transaction time. Mastercard implemented machine learning solutions as a response to outdated decision-scoring methods that imposed the same rules on every transaction. Decision Intelligence 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 of the consumer.