Using AI to stay ahead of payment fraud

Fraudsters are employing more advanced tactics to carry out payment scams, driven by the growing reliance on digital payment methods. A Visa-commissioned study found that while many Singapore residents trust digital payments, a significant number have encountered scams and even lost money to them. Fraud tactics are evolving, with scammers increasingly using AI, automation, and social engineering to persuade victims to authorize payments themselves.

The challenge for businesses lies in distinguishing between legitimate and fraudulent transactions quickly, without causing unnecessary delays to genuine payments. Traditional fraud prevention methods, which rely on fixed rules to flag risky transactions, are falling behind due to the speed and sophistication of modern fraud tactics. Fraudsters are no longer just intercepting payments but impersonating individuals to carry out transactions.

To address this, Visa has invested heavily in AI-driven fraud prevention technologies, developing tools that can analyze transactions in real time and compare them to patterns across its global network. These tools can quickly identify suspicious activity while minimizing false declines. For instance, Visa Protect includes features like Visa Advanced Authorisation for real-time risk assessment, Visa Risk Manager for issuer fraud controls, and Decision Manager for AI-based fraud detection in digital commerce.

Additionally, Visa has acquired Featurespace, a company that uses machine learning to learn each customer's typical behavior and flag activity that deviates from their patterns.

The goal is to enhance security and trust in digital commerce without disrupting the payment process for legitimate customers. This balance is crucial as digital commerce continues to expand, making it essential for businesses to maintain the trust of their customers while effectively combating fraud.