Visa AI blocks $350 million in fraudulent transactions as cybercrime spikes in pandemic

AI-powered security measures are protecting businesses from card fraud, with data from Visa showing machine learning algorithms prevented $354 million in fraudulent transactions in the past year.

Despite a boom in online retail spending of 44% in 2020, incidents of card fraud rose just 0.6%, revealing fraud prevention measures adopted by payment platforms are working, according to Visa. 

The AI used by digital payments giant Visa operates neural networks modelled on the human brain to make real-time risk assessments that determine the fraud probability of every transaction passing through its network. 

Carolina Gallegos, Visa Australia head of risk, tells SmartCompany the majority of fraud detected occurs online rather than during face-to-face transactions.

“It’s important that small businesses are working with providers who are sharing a level of detail with them, in terms of what was fraud, what happened, or in some cases they’ll manage that on their behalf,” Gallegos says.

Using data to block crime 

Account testing attacks, also known as enumeration, happen when criminals use automation to test and guess payment details, such as account numbers and expiry dates at online checkouts. 

According to VisaNet data, these attacks have become one of the top threats in Australia throughout the pandemic and the best way to combat them is by using AI-driven tech.

“In this scenario, the fraudsters take a BIN, which is the first six digits of a Visa card, and they try to guess the subsequent digit to get approval for a low dollar amount at an online business,” Gallegos says. 

Businesses affected by successful account testing attacks experience thousands of small transactions within a short-time frame that can easily pass under their radar.

To detect these attacks, Visa’s security system analyses patterns in data to alert affected merchants and financial institutions before a fraudulent transaction is made. 

Gallegos says the bank that issues the card will decide whether or not to approve a suspicious transaction.

“The bank will then make some additional notifications via SMS, a one-time passcode, email or even a phone call to the customer,” she says.

Cybercrime thrives in the pandemic

The shift to online shopping and work from home throughout the pandemic has led to a rise in cybercrime, making fraud prevention more important for payment system providers and businesses.

The Australian Cyber Security Commission’s annual report found criminal actors have exploited the pandemic environment by targeting Australians’ demand for digital services.

The report found ransomware rose 15% in 2020-21 and business email compromise continues to be a threat.

The average loss of each successful incident of business email compromise was more than $50,600, up 150% compared to the previous year.