TSB, one of the nine banks, said Mastercard’s AI tool has increased its ability to detect fraud on the APP by 20%.
US multinational financial services company Mastercard Inc (NYSE:MA) has created a new artificial intelligence tool that helps detect fraudulent transactions and has shipped the tool to a few banks.
Mastercard calls its AI tool the Consumer Fraud Risk System and has already installed it in nine British banks in the UK. Some of them include Bank of Scotland plc, Lloyds Banking Group and NatWest Group plc.
According to Bloomberg a reportMastercard trained its AI tool using years of transaction data. This training allows the tool to predict customer attempts to move funds that may be flagged for certified instant payment (APP) fraud. These scams convince someone to transfer money to an account that pretends to be legitimate. Scammers may create accounts and pretend to be affiliated with a business or a known friend or family member.
According to Mastercard’s Head of Internet and Intelligence, many APP (Authorized Payment Payments) scams are difficult to deal with because they involve transfers completed legitimately by account holders. Bhalla says Mastercard considers this a “big issue” because because the transfers are legitimate, they pass security checks that have been published to detect other fraudulent schemes such as unauthorized payments.
How does Mastercard’s AI tool work?
Mastercard’s AI tool detects all conversion attempts made by customers. The Consumer Fraud Risk System identifies each attempt with a risk score from 0 to 999 in less than a second. With the help of its own analysis and AI tool, the bank can prevent a potential transaction in time.
Mastercard created the tool using extensive work with banks. For five years, the payment processor has collaborated with banks to study how scammers move money between banks. These scammers use this method to complicate or disguise fraudulent activity. With this information, Mastercard noticed certain patterns and multiple accounts that may increase the risk of fraudulent behavior and used this data to train the AI tool.
The Bloomberg report states that TSB Banking Group Plc is the first organization to install the system. Since implementation four months ago, the bank’s ability to detect this type of fraud has increased by 20%. TSB predicts that UK banks could save £100m each year upon full industry adoption of Mastercard’s AI tool. According to the bank’s Head of Fraud, Paul Davis, “This is a good example of the power of data sharing. It’s the first time we’ve been able to see both sides of a payment—the sending and the receiving.”
Bank fraud statistics
Seon online fraud prevention platform highlighted the cost of fraud in a June publication. According to Seon, there was a 4.2% increase in the total fraud cost per dollar for all retail services in the US, including banks. The report estimates specific bank payment fraud losses at $1.6 billion. Additionally, Seon states that every $1 scam costs $4.23.
last a report It states that APP fraud in the UK amounted to £479m in 2020, with online banking fraud up 64% in 2019. The report also notes that 47% of all bank fraud cases in the UK occurred through banking channels far. He adds that the average loss for a victim is £600 per case.
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Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify cryptocurrency stories down to the bare essentials so that anyone anywhere can understand without much background knowledge. When he’s not deep into cryptocurrency stories, Tolo enjoys music, loves to sing, and is a movie lover.