Unveiling Mastercard’s AI Armor: Supercharging Fraud Detection

Mastercard, the payments behemoth, has announced the creation of its own generative AI model to aid in the detection and elimination of fraudulent transactions across its network of thousands of institutions. The company’s latest advanced AI model, Decision Intelligence Pro, will help banks identify and verify the legitimacy of suspicious transactions on its network in real-time.

Mastercard does employ open source “whenever needed,” but according to Bhalla, the “majority” of their technology is developed internally. Data from the approximately 125 billion transactions processed by Mastercard’s network each year are used to train the company’s proprietary algorithm. To assess if the business involved in a transaction is a place the consumer would likely visit, Mastercard’s algorithm uses the cardholder’s merchant visit history as the trigger, rather than textual inputs.

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After that, it finds the solution in the form of a score by creating pathways through Mastercard’s network, which is similar to heat-sensing radar. If the cardholder’s actions are consistent with the norm, they will have a high score; otherwise, they will have a low score. According to Mastercard, this entire procedure takes less than half a second. Its March 2023 acquisition of Swedish cybersecurity firm Baffin Bay Networks is one of several acquisitions in this category.

Visa, an AI rival, has also put money into the field, most notably a $100 million venture fund it set up in October 2023 to support AI companies developing generative models. Though it’s early days, Mastercard expects their technology to help banks save 20% by reducing the expenses they would normally spend on detecting fraudulent transactions. Mastercard’s technology can really shine when it comes to seeing trends and patterns of fraud in order to foretell future forms of fraud that aren’t yet recognized to exist in the payments ecosystem. A number of digital banking and payment processing organizations have lately stated that AI will cause substantial product changes. New AI-based goods and a one-click checkout functionality were revealed by PayPal last week.

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