Mastercard has begun using new artificial intelligence technology to help financial institutions determine whether and when to decline card transactions, the company announced Wednesday.
The technology, called Decision Intelligence, uses algorithms to “learn” from each transaction on an account, allowing it to detect normal and abnormal spending activities. It calculates a predictive score for the card issuer, which can then make real-time decisions about an account, including defined alert and decline thresholds. The company said it is the first use of global-scale AI on the Mastercard network
“We are solving a major consumer pain point of being falsely declined when trying to make a purchase,” Mastercard President of Enterprise Risk and Security Ajay Bhalla said. “By using AI technology on our global network, we’re helping financial institutions and merchants improve approval rates — and the consumer experience.”
Mastercard said its new technology incorporates information about customer value segmentation, risk profiling, location, merchant, device data, time of day and purchase type. The idea is to create more accurate fraud scoring on transactions, reduce chargebacks and reduce the number of false declines, the company said.
In the United States, the value of false declines is more than 13 times the total amount lost to actual card fraud, according to Javelin Strategy & Research Senior VP, Research Director and Head of Fraud and Security Al Pascual.
“Applying machine learning to decision-scoring is a new way of creating a positive consumer experience, while also minimizing fraud,” he said.
