Mastercard says artificial intelligence and artificial intelligence will be the future of fraud prevention
Mastercard says artificial intelligence (AI) is fueling “unprecedented” levels of fraud and cybercrime.
It may also be one of the best defenses the business community has against these threats, the payments giant said Monday (March 9) when it released a report during Fraud Prevention Month.
“Fraud and cybercrime are escalating at an unprecedented scale, eroding consumer trust and threatening the health of businesses around the world,” Michele Centemero, executive vice president of European Services at Mastercard, said in a press release emailed to PYMNTS.
“But the payments industry is fighting back. By collaborating across borders and harnessing the power of artificial intelligence, we are building a fraud prevention ecosystem that provides end-to-end protection for merchants and consumers, allowing people to transact with confidence, speed and choice, no matter which payment method they choose.”
The most common type of fraud is social engineering scams, the report said. Mastercard said scammers use “deception and emotional manipulation” to create a false sense of trust and urgency and convince victims to hand over sensitive information or take “actions that cause financial harm.”
“Being vigilant about any unsolicited requests, verifying identity before sharing personal information, and avoiding suspicious links or attachments can help protect individuals from harm,” the report added.
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Looking ahead, the report believes the next phase of defense “must be AI on AI,” using systems that can “learn, predict, and act on the fly.”
“As autonomous agents begin to conduct transactions on behalf of humans, authentication and defense will shift to real-time verification of identity and intent,” the report states.
Mastercard also predicts the rise of “security by design” among retailers, who will increasingly turn to payment partners to embed cybersecurity measures “at every level of commerce.”
Research from PYMNTS Intelligence and Block shows that as fraud cases increase, banks are turning to technologies such as artificial intelligence.
Research shows that 71% of fraud incidents and dollar losses are now related to unauthorized party schemes, a significant increase from 48% last year. 68% of financial institutions said their spending on fraud detection has increased year over year, while 46% said they are seeing increasingly sophisticated fraud schemes.
“The resurgence of unauthorized access reflects a broader evolution in tactics. Fraudsters are exploiting credentials, manipulating payment information and targeting faster payment channels,” PYMNTS wrote.
“As the report's breakdown of fraud types shows, digital payments fraud and compromised credentials represent an increasing share of transaction volume and dollar value. This is not a static crime. It adapts. Institutions respond. The cycle repeats itself.”
