Mastercard Bolsters AI for Banks to Combat Payment Fraud

Mastercard, the global payments technology company, has expanded its artificial intelligence (AI) capabilities to help banks combat increasingly sophisticated payment scams and protect their customers.

The company’s enhanced Consumer Fraud Risk (CFR) solution now offers additional features to combat Authorised Push Payment (APP) fraud, to address Authorised Push Payment (APP) fraud, where victims are deceived into transferring money to fraudulent accounts.

This comes during a time where the banking industry is facing increased cybersecurity threats from so-called ‘malicious actors’, who are eager to exploit both personal and corporate data for monetary gain. Some of the main threats or methods used against banks in cyberattacks include ransomware, phishing, trojans and spoofing.

Growing concerns over APP fraud

In 2023, UK consumers lost £460m (US$615m) to APP fraud. These losses were often initiated through deceptive websites, emails, text messages or phone calls by threat actors. 

This rising problem has prompted regulatory action, with the UK's Payment Systems Regulator (PSR) set to introduce new rules on 7th October 2024, which requires banks to reimburse APP fraud victims in most cases.

Mastercard's CFR solution, operational since early 2023, uses AI to analyse multiple data points within a transaction. It is then able to provide a real-time risk score to the sender's bank so they can identify and halt any fraudulent payments before processing.

“Fraudsters have long sought to deceive the consumer through scam websites and fictitious deals,” comments Johan Gerber, Executive Vice President of Security Solutions at Mastercard.

“That's why, at Mastercard, we are turbocharging our technology, providing banks additional lines of defence – helping them better identify and stop scams in their tracks.”

The CFR system's latest enhancements extend its capabilities to receiving banks. These institutions can now receive risk scores within seconds, allowing detection of payments potentially destined for 'mule' accounts - which are accounts controlled by fraudsters.

On track for global expansion

Mastercard reports that initial offline tests of the new 'inbound risk' alerts have demonstrated a 60% improvement, on average, in a bank's ability to identify high-risk mule accounts early within its account base.

This development comes as PSR data from 14 of the largest banks in the UK showed a 12% reduction in the total value of APP scams from £389m (US$520m) to £341m (US$456m) across 2023.

As a result, Mastercard plans to expand the CFR solution to markets globally within the year, aiming to extend consumer protection and contribute to building a more secure digital ecosystem.

Johan Gerber adds: “We are turbocharging our technology, providing banks additional lines of defence – helping them better identify and stop scams in their tracks.”

The launch of Mastercard's CFR solution follows the company’s release of Decision Intelligence Pro, a generative AI (Gen AI) consumer protection tool, earlier in 2024. This transaction risk assessment tool evaluates relationships between multiple entities surrounding a particular transaction and further represents Mastercard’s pledge to improve cyber safety for its consumers.

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