Mastercard Applies AI toward Reducing False Declines

Late last week, Mastercard launched a new solution called Decision Intelligence that taps artificial intelligence to help merchants solve one of their thorniest challenges: delaying or cancelling legitimate orders because they appear fraudulent. While merchants are still concerned about fraud rates, sophisticated fraud prevention solutions and strategies have been available for some time. But false declines have remained a persistent problem as fraudsters adjust their tactics and get better at appearing as legitimate customers. According to a Javelin Strategy and Research estimate, 13 times more revenue is lost to false declines than to fraud. The problem is so pervasive that it prompted Mastercard’s first global implementation of AI across its network.

“We are solving a major consumer pain point of being falsely declined when trying to make a purchase,” said Ajay Bhalla, president of enterprise risk and security for Mastercard. “By using AI technology on our global network, we’re helping financial institutions and merchants improve approval rates—and the consumer experience.”

Mastercard has been active in exploring new technology to authenticate online users. The company recently expanded its “pay-by-selfie” pilot to Europe and has introduced several new technologies for online e-commerce merchants to control fraud. Bhalla said Decision Intelligence is not meant to replace those technologies, but to augment them. The company said the addition of AI as a core component of its network will deliver an enhanced fraud score for every transaction.