How Artificial intelligence (AI) Transforming Fraud Detection in Cards Payment

In today’s world, payments via cards are the most common way for people to make transactions. With the increase in online shopping and contactless payments, online fraudsters have become very advanced, making traditional fraud detection methods less effective. Here is where the buzz surrounding Artificial Intelligence (AI) comes in, as it has begun reshaping the entire landscape of fraud prevention as we know it. With an AI powered fraud detection system, financial institutions can analyze a plethora of information in the blink of an eye, detect abnormal behaviors, and stop fraud attempts before they can be enacted. But how does this system work and what does it imply to the card issuers, merchants and consumers? Let explore how AI is changing the landscape in relation to payment frauds.

Real-Time Fraud Detection

AI-powered systems analyze transactions in real time, identifying anomalies based on historical spending patterns. If a transaction deviates significantly from a customer's usual behavior—such as a large overseas purchase or multiple transactions within seconds—the system can flag it for review or decline it instantly.

AI-Powered Fraud Detection in Card Networks: MasterCard & Visa

Leading payment networks like MasterCard and Visa use AI-powered fraud prevention tools to enhance security and decision-making. These networks provide data elements and risk-based authentication solutions to help issuers detect fraud efficiently. 

Mastercard has integrated AI-driven fraud detection into its transaction processing network. Some key AI-based fraud prevention mechanisms include:

• MasterCard Decision Intelligence (MDI): Uses AI to assess each transaction’s risk in real-time and provide a risk fraud score.

• DE 48   sub element 75 sub field 01 Fraud Sore
• DE 48, sub element 56, subfield 1 (AIQ (Digital Transaction Insight) Risk Level
• DE 48, sub element 56 subfield 2 (AQF AUTH IQ Channel Spend Frequency)
• DE 48, sub element 56 (AQF AUTH IQ Account  Spend Frequency)
• DE 48, sub element 75, subfield 4 (Model Reason Code)
• DE 48   sub element 56  (Digital Transaction Insight) Reason Code 1
• DE 48   sub element 56  (Digital Transaction Insight) Risk Level
  

Final Thoughts

AI is revolutionizing fraud detection in card payments, making transactions safer and more seamless for consumers and businesses. Payment networks like MasterCard and Visa have integrated AI-driven risk assessment tools, providing valuable fraud detection insights through specific ISO data elements. By leveraging real-time monitoring, behavioral analysis, biometric authentication, and machine learning, AI helps financial institutions stay ahead of fraudsters.

As AI technology advances, fraud detection will continue to evolve, ensuring a more secure and efficient digital payment ecosystem.