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In an age where digital transactions are everywhere, payment card fraud has become a pervasive threat to individual consumers and businesses. With the country possessing over 87.7 million credit cards across 34 scheduled commercial banks as of May 2023, fraud cases are expected to rise. But the good thing is that Artificial intelligence (AI) opens new avenues in the fight against payment card fraud. AI offers sophisticated tools based on its capacity to learn and adapt in real time and is transforming the landscape of fraud detection.
According to Lalit Mehta, Co-Founder and CEO, Decimal Technologies, utilizing advanced algorithms and machine learning, AI systems analyze vast datasets, identifying patterns and anomalies associated with fraudulent activities. These systems continuously evolve, adapting to emerging fraud tactics and ensuring robust protection against evolving threats.
“AI enhances real-time monitoring of credit card transactions, enabling swift identification of suspicious behaviour. Behavioural analytics, a key component of AI-powered fraud detection, establishes a baseline of normal user activity and promptly raises alerts when deviations occur. Additionally, AI contributes to biometric authentication, adding an extra layer of security by verifying user identities through fingerprint or facial recognition. Predictive modelling, a feature of AI, anticipates potential fraud by assessing historical data and recognizing subtle indicators,” Mehta said.
This proactive approach enables financial institutions to implement preventive measures, reducing the likelihood of unauthorized transactions.
Dinesh Mohan, Head of Delivery and Operations, Digital Practice, Expleo, said that AI is like having a sidekick that constantly hones its skills, staying one step ahead of the bad guys.
“By automating the fraud detection process, they work at lightning speed, minimizing false alarms and swiftly raising the alarm on potential threats. Think of AI as your financial guardian angel, using behavioural analysis to sniff out irregularities and set off warning bells before any damage can happen. In a nutshell, AI isn’t just a tech wizard; it’s your trusted ally, always on guard, adapting to new tricks, and making sure your financial transactions are as secure as they can be,” Mohan added.
Lucie Fosenca, global head, R&D, Giesecke+Devrient feels analyzing past transactions of cardholders, AI can predict typical user behavior and spot anomalies.
“It considers a multitude of factors: the time of the transaction, the location, the device used, the merchant category, and even the speed of typing in the case of online purchases. If a transaction doesn’t fit the user’s profile, the AI can require additional authentication or block the transaction outright,” Fosenca said.
However, the use of AI in detecting payment card fraud raises valid concerns about privacy and the ethical use of data. With AI systems requiring vast amounts of personal data to function effectively, it is essential to safeguard this data against breaches, misuse or unethical use and ensure compliance with regulations.
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