Online merchants can no longer rely on simple rule-based engines to stop fraud. Utilizing artificial intelligence is essential in protecting your business from modern fraud attempts.
The tactics used to commit card-not-present (CNP) fraud have changed dramatically in the last decade. The solutions used by merchants in the past to detect fraud attacks aren’t as effective because the patterns and methods of committing fraud are ever evolving.
Here’s the bottom line: Traditional approaches to stopping fraud that involve rule-based decisioning engines don’t offer the level of protection that’s necessary to effectively prevent fraud attacks. The tactics used to commit fraud today are more nuanced and require artificial intelligence (AI) and machine learning algorithms to identify and stop.
In this article, we’ll look at the key benefits that come with using artificial intelligence as part of your fraud prevention strategy.
What is Artificial Intelligence?
Artificial intelligence is a computer’s ability to imitate the decision-making and problem-solving capabilities used by the human mind. AI solutions are used by numerous business sectors to help improve processes, but the use of AI for fraud prevention is a unique application of the technology that’s advanced significantly over the last decade.
With the help of AI, companies are now able to accurately trace the steps of card usage and detect fraudulent transactions before they’re approved.
Quickly Discover Behavior Anomalies
One of the most significant benefits of using artificial intelligence is the capability to quickly uncover behavior anomalies on your platform. For example, the average user might log into their account, browse through your website, and spend time scrolling through the product page.
A criminal who has compromised a user account will likely add as many items to their cart as possible within the shortest amount of time.
Similarly, they may choose to ship to an address that the account owner has never used before. The same can be said about implementing a payment method that the account owner has not previously used.
Artificial intelligence will quickly discern this type of behavior and alert you of its occurrence.
Customizable Risk Thresholds
Every business has a different level of risk tolerance. If you are too rigid in your security endeavors, legitimate customers may find your platform difficult to use.
To elaborate, they might experience a hold on their payment even though they are the legitimate owner of the account and the credit card they are using.
As you might guess, using AI with a zero-tolerance for risk will only lead to a sharp interruption in your sales performance. Fortunately, you can customize your level of risk tolerance in order to generate the highest number of sales while simultaneously minimizing the potential of fraudulent payments.
As previously mentioned, fighting against online fraud used to be a complex process that involved manual transaction review. More often than not, merchants wouldn't even know that fraud occurred until they received a chargeback claim from the card company.
To make matters worse, these often took between six and eight weeks to dispute and resolve.
Artificial intelligence provides real-time detection that can immediately alert you of any incidents that need your attention. This allows site owners to take action as soon as possible and prevent additional complications from occurring.
Minimize False Declines
It’s estimated that businesses lose 3% of their revenue due to false declines every year. With the help of artificial intelligence, you can improve the accuracy of you fraud detection and approve more legitimate transaction while only rejecting fraudulent ones.
Today, however, AI has become notably efficient at minimizing the total number of false declines that merchants incur. A fraud solution that utilizes AI can precisely identify transaction anomalies, rather than using rule-based decisioning engines that can often reject legitimate customer orders.
Using AI to Fight Fraud Can Seem Difficult
When implemented correctly, artificial intelligence can greatly improve your business’s ability to detect and stop fraud attacks. Don’t expect rule-based fraud solutions to keep up the evolving tactics used by organized fraud rings.
Vesta end-to-end transaction guarantee platform uses AI & machine learning models trained on 25 years of global data across the world’s largest mobile networks and digital merchants to detect fraud. If you’re interested in learning more about what our platform offers, feel free to reach out to us today and see how we can help.