With the increase of card-not-present transactions during COVID-19, theft has skyrocketed. By 2023, it’s predicted that the incidence of fraud will rise by 14 percent.
Are you surprised that experts predict a $130 billion loss from digital payments?
Many businesses are turning to artificial intelligence (AI) solutions to fight back. Continue reading to learn about how AI can make digital payments safer.
Why Use Artificial Intelligence?
As with most situations, preventing problems is easier than fixing them. AI solutions focus on detecting fraud before completing transactions. This decreases your operational costs.
AI uses machine learning. Algorithms guide the machine's collection of data.
It then analyzes interactions with the real-world. Data collected over time gives more points of comparison to improve decision-making.
Risks with Digital Payments
What makes contactless payment riskier? Since customers don’t enter PINs or other information, it’s easy to use stolen card data.
Phones without adequate security features increase the risk of undetected fraudulent payments. Often, these payments don’t have receipts, making it hard to prove illegal charges. AI solutions offer the following benefits.
1. Identifying Fraudulent Charges
“Anomalous transactions” (ATs) isn't like other banking exchanges. This makes them hard to detect.
Remember, different doesn’t always mean fraud. Yet, financial institutions must protect against criminal activity such as money laundering.
AI offers a superior method for discerning fraudulent from legitimate AT. When the AI detects an AT, it sends a one-time password (OTP) to the account owner. This dynamic password serves for only one login session on the digital device.
Frequent AI audits analyze ATs to discern suspicious activity. This reduces investigation time, enhances detection, and mitigates fraud.
2. AI for Fraud in Healthcare
Organized crime groups have increased their fraudulent activity in the healthcare sector. They employ some of the following criminal strategies:
- Fictitious billing for services
- Overbilling for procedure services provided
- Billing for unnecessary services
- “Unbundling” steps of a procedure and billing each one separately
- Overbilling insurance companies instead of charging patients' co-pays or deductibles
AI’s machine learning uses preprogrammed rules sets to collect data and analyze it. The AI detects signs of criminal behavior and flags it. By studying behaviors, the machine reduces its false-positive rates as well.
3. Prevent Identity Theft
There’s been a dramatic rise in scamming over the past several years. This occurs via email, social media, banks, and other sources. The thieves use this information for both financial and non-financial reasons.
More businesses today are using AI solutions to verify customers. This helps prevent the inadvertent release of personal information and fraudulent transactions.
4. Prevent Fraudulent Marketing Scams
Businesses lose billions of dollars each year due to advertising fraud. The criminals may hijack your ad and divert it for use in their scams.
Once again, AI can monitor for signs of these diversion tactics. This allows you to protect your digital ad space.
5. Decrease False Positives
If business’ fraud detection systems lack adequate sensitivity, you risk denying legitimate customers. It’s key to install a system that provides targeted and relevant monitoring.
Since the criminals keep changing their approach, security systems must adjust. This keeps you ahead of the bad guys.
Searching for the Best Fraud Detection Solution?
Contactless payments will continue in business. Thus, organizations must optimize their digital payment security solutions.
At Vesta, we handle proprietary customer data for businesses worldwide. Our solutions detect and record known e-commerce fraud sources.
Our patented fraud technology applies this information to find emerging threats. This allows us to optimize your security and revenue. Connect with us today to find the solution that fits your needs.