How AI can stop credit card fraud – as it happens

Mohan Jayaraman says despite fears that the rise of artificial intelligence poses a risk to humanity, a quiet revolution is under way as it plays a role in the speedy and accurate detection of dubious credit card activity

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Credit card fraud affected 42 per cent of respondents in a recent poll of countries in the Asia-Pacific. Photo: Alamy

Published: 2:40pm, 12 Dec 2017Updated: 6:17pm, 12 Dec 2017

Artificial intelligence has featured in some alarming headlines this year, with Tesla chief Elon Musk warning that this field could pose an “existential risk for human civilisation”.

But a more discreet AI revolution is under way in preventing card fraud using machine-learning algorithms. Here, we find a study on the rewards and limits of this cutting-edge technology, which may prove instructive for other industries.

AI can parse vast troves of data and detect even the most subtle aberrant patterns in transactions and other user behaviour, giving us the ability to make sense of the growing cloud of “data exhaust” generated by consumers.

Card fraud is a worthy test of its potential, affecting 42 per cent of respondents polled in Experian’s new Fraud Management Insights 2017 research report on 10 Asia-Pacific countries.

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But thanks to machine-learning algorithms, banks and credit card companies can now spot dubious activity almost instantly, even mid-transaction. This can be achieved with a marked reduction in false positives, resulting in a better consumer experience.