Mastercard Improves Artificial Intelligence Tools to Combat Payment Fraud

Mastercard has introduced significant upgrades to its Consumer Fraud Risk (CFR) solution, aimed at helping UK banks combat increasingly sophisticated Authorised Push Payment (APP) fraud, as stated in FinTech Magazine. APP fraud occurs when scammers deceive individuals into transferring funds to fraudulent accounts, often through fake websites, emails, text messages, or phone calls. In 2023 alone, UK consumers lost £460 million (US$615 million) to these scams.

To address this growing problem, the UK’s Payment Systems Regulator (PSR) will implement new rules starting on October 7, 2024. These rules will require banks to reimburse most victims of APP fraud, creating a stronger incentive for financial institutions to adopt advanced fraud prevention technologies.

Mastercard’s CFR solution, launched in early 2023, uses artificial intelligence to analyze multiple data points in real time. By assigning a risk score to a transaction, the system alerts the sender’s bank to potential fraud, allowing them to block the transaction before it is processed. With the latest enhancements, receiving banks can now also access real-time risk scores, enabling them to detect when a payment is being sent to a ‘mule’ account—an account used by fraudsters to collect illicit funds.

Johan Gerber, Executive Vice President of Security Solutions at Mastercard, explains the importance of this development: “Fraudsters have long sought to deceive the consumer through scam websites and fictitious deals. That’s why, at Mastercard, we are turbocharging our technology, providing banks additional lines of defense—helping them better identify and stop scams in their tracks.”

Early tests of the enhanced CFR system have been promising. Mastercard reports that ‘inbound risk’ alerts have led to a 60% improvement in banks’ ability to identify high-risk mule accounts. The announcement comes as the PSR revealed a 12% reduction in APP fraud losses across 14 major UK banks, with the total amount falling from £389 million (US$520 million) in 2022 to £341 million (US$456 million) in 2023.

Mastercard plans to expand the CFR solution to global markets over the coming year, aiming to offer enhanced protection to consumers worldwide and build a more secure digital ecosystem. This initiative follows the launch of Decision Intelligence Pro, a generative AI tool released by Mastercard earlier in 2024. Decision Intelligence Pro assesses transaction risks by analyzing relationships between multiple entities, further demonstrating Mastercard’s commitment to strengthening consumer safety.

As APP fraud continues to rise, solutions like Mastercard’s Consumer Fraud Risk tool will play a critical role in the ongoing fight against financial scams.