Mastercard Taps AI to Tackle UK APP Fraud Epidemic

Mastercard has introduced what it says are new protections against real-time payment scams.

The update to the company’s Consumer Fraud Risk (CFR) solution, announced Tuesday (Sept. 24), uses artificial intelligence (AI) to provide British banks with more visibility to prevent fraudulent transactions.

The announcement comes just days ahead of new rules requiring U.K. financial institutions to reimburse victims of authorized push payment (APP) fraud, which Mastercard notes is typically triggered by a fictitious website, email, text message or phone call. Such scams cost British consumers $607 million in 2023.

“Fraudsters have long sought to deceive the consumer through scam websites and fictitious deals,” said Mastercard Executive Vice President, Security Solutions Johan Gerber.

“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.”

The company says its solution has since last year helped 11 British banks identify and prevent scams. The tool works by scanning multiple data points associated with a transaction and providing a real-time risk score to the sender’s bank.

“The new, additional AI enhancements to Consumer Fraud Risk provide the receiving banks the same score within seconds, making it possible for them to detect when a payment may be destined for an account used by fraudsters, known as a mule account,” Mastercard added, noting that it plans to expand the fraud risk prevention globally “within the year.”

Mastercard’s updated offering comes as financial institutions (FIs) are increasingly turning to AI to bolster their fraud prevention capabilities.

“The adoption of AI and machine learning (ML) technologies is transforming how transactions are monitored and secured,” PYMNTS wrote last month.

“A significant 94% of payments professionals view AI primarily as a tool for improving fraud detection. AI’s predictive analytics capabilities help identify potential fraud by analyzing user behavior patterns and transaction anomalies.”

Aside from fraud detection, AI is being employed for personalized customer service and operational efficiencies. And a survey last year by FICO survey found that a little more than three-quarters of customers expect FIs to use AI for better fraud prevention, spotlighting the increasing demand for advanced security measures.

“AI’s ability to provide real-time alerts about suspicious activities further underscores its critical role in the future of secure and efficient payments,” PYMNTS wrote.