Mastercard Battles Fraud, False Declines with AI-Based Tool
Mastercard is employing artificial intelligence to improve the accuracy of real-time transaction approvals by minimizing false declines and fraud. Decision Intelligence, Mastercard’s decision and fraud detection service, is available across all markets for all Mastercard brands and products, according to the company’s Dec. 1 announcement.
Decision Intelligence monitors how accounts are being used over time and factors in information such as risk profiling, location, merchant, device data, time of day and type of purchase made to determine whether the transactions are part of cardholders’ typical shopping behavior. Decision Intelligence’s algorithms provide a predictive score to the issuers, which they can use with their own fraud-mitigation processes or with Decision Intelligence to provide real-time decisions based on specific accounts’ defined alert and decline thresholds.
“We are solving a major consumer pain point of being falsely declined when trying to make a purchase,” said Ajay Bhalla, Mastercard president of enterprise risk and security. “By using AI technology on our global network, we’re helping financial institutions and merchants improve approval rates and the consumer experience.”
Protecting against fraud while not alienating customers with incorrectly declined transactions is a balancing act for retailers and financial institutions to be sure. More than one-third of consumers have stopped shopping at a retailer after their card transaction was falsely declined and one-fifth of consumers, according to Aite Group, have switched banks after experiencing fraud (see infographic).
“We estimate that in the U.S. alone, the value of false declines is more than 13 times the total amount lost to actual card fraud,” said Al Pascual, senior vice president, research director and head of fraud and security at Javelin Strategy & Research. “Applying machine learning to decision-scoring is a new way of creating a positive consumer experience, while also minimizing fraud.”