Visa Releases New AI-Based Token Fraud Detection Product (Well, Not Really AI)

But AI is really the buzzword, so if the writer puts AI in the title then maybe more people will read it.

Specifically this is designed to help banks prevent token fraud, which is hard to do anyway. Token fraud happens when a merchant “tokenizes” a credit card transaction so that the merchant doesn’t have to collect or store sensitive credit card fields like the primary account number or PAN. This is the number printed or embossed on the card.

Generally speaking, merchants have to specially build their web software to tokenize your transaction, but all smart merchants do this because it greatly reduces their risk of a credit card breach.

Still, even with tokenization, you have to deal with consumers committing fraud and this is one part of this tool is designed to help detect before the transaction is completed.

Why this is important is that the merchant is likely the one who eats the fraud. Less fraud means less losses and more profits.

Called Visa Provisioning Intelligence (VPI), Visa says it uses machine learning (NOT AI) to rate individual transactions, in real time, and give each transaction a score from 1 (fraud is not likely) to 99 (fraud is almost certain).

Visa also says that tokens can be “illegitimately provisioned”(I think this means stolen) by criminals. If tokenization is done right, not only do the crooks have to steal the tokens, but they have to steal the merchant’s authentication (userid/password, API key, etc.). All of which, of course, is possible, maybe by good old fashioned social engineering.

Visa said that their losses from token fraud was about a half billion dollars in 2022. While that represents a small piece of overall credit card fraud, which is in the tens of billions a year, this may be a relatively easy place to start and learn for Visa.

With VPI, banks will be better able to detect fraudulent transactions before they are authorized and cut everyone’s losses – except for the hackers, of course.

Assuming this works well, expect Visa (and likely Mastercard) to expand the use of this.

Credit: CSO Online

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