Mastercard fights real-time payment scams with AI

Making use of the most up-to-date AI-powered insights, Mastercard is looking to help banks predict scams in real time and ahead of any money leaving a victim’s account. Ranging from romance scams to fictitious online deals, all kinds of impersonation scams have affected both people and businesses in the past years and contributed to the loss of confidence from those affected. Mastercard is looking to tackle this issue with its Consumer Fraud Risk solution.

Mastercard’s Consumer Fraud Risk solution and real-time payment scams

Making use of Mastercard’s latest AI capabilities and its unique network view of account-to-account (A2A) payments, the service assists banks with predicting and preventing payment scams of all types. Mastercard is leveraging large-scale payments data to help identify real-time payment scams before funds leave a victim’s account, in collaboration with nine UK-based banks, including Lloyds Bank, Halifax, Bank of Scotland, NatWest, Monzo and TSB.

To disguise ‘scammed’ funds, organised criminals move them through a series of ‘mule’ accounts. To be able to counter this, Mastercard has cooperated with banks in the UK for the past five years to follow the flow of funds through these accounts and then close them down. With a basis on insights from this tracing activity and their overlay with specific analysis factors of the likes of account names, payment values, payer and payee history, and the payee’s links to accounts associated with scams, Mastercard’s AI solution enables banks with the intelligence required to intervene in real-time and stop a payment prior to the funds being lost.

The announcement details TBS as being among the first banks to adopt Mastercard’s tool and based on their results, payment scams prevented over a year are believed they would amount to GBP 100 million across the UK, should this performance be mirrored by all banks. The Consumer Fraud Risk service is set to be adopted by other banks throughout 2023 and Mastercard is assessing additional international markets to scale it further.

Following an advancement in banking and payments security, fraudsters have moved to impersonation tactics, having the goal of convincing people and businesses to send them money thinking the transfer is to a legitimate person. Referred to as authorised push payment (APP) fraud, this currently accounts for 40% of UK bank fraud losses and it is estimated it would reach USD 4.6 billion in the US and UK alone by 2026.

When commenting on this, Ajay Bhalla, president of Cyber and Intelligence at Mastercard advised that banks have been facing challenges in detecting these scams, as customers pass the required checks and send the money themselves, with the criminals having no need to break any security measures. The company is looking to assist banks with identifying and predicting the payments made by fraudsters and stopping them in real time by leveraging the latest AI technology.

Paul Davis, Director of Fraud Prevention, TSB added that as stopping fraudulent payments has increased in difficulty following the growth in scams’ complexity, prevention and monitoring tools are key, and the collaboration with Mastercard is providing the intelligence required to identify fraudulent accounts and prevent payments from reaching them.