The rise of artificial intelligence is not a single force or event — not like the tide rising in the distance. It is countless steps forward (or sideways), little bits of progress and development — pieces fitting together to form a still unseen whole. In this case, artificial intelligence (AI) is moving deeper into the acquiring world.
A big piece is coming together. On Tuesday (July 9), Elavon, a merchant processor and subsidiary of U.S. Bank, said it will fight fraud via the artificial intelligence platform operated by Brighterion. In advance of that announcement, PYMNTS spoke with executives from both companies to better understand what this means for the protection of payments and the future of AI when comes to combatting fraud.
The deal is designed to better protect eCommerce transactions, and comes after the U.S. EMV migration and the liability shifts associated with that push. EMV might offer more security for many payment card transactions, but criminals keep coming up with new ways to conduct fraud, and that includes card-not-present transactions. “For fraudsters, it’s like a balloon,” Brighterion Founder, President and CEO Akli Adjaoute told Karen Webster in describing that process. “You squeeze it from one side and goes to the other.”
More specifically, what’s happening is this, according to the two companies: Elavon will integrate into its network Brighterion’s advanced AI platform. It’s a move that brings anti-fraud and risk-management AI technology into the world of acquirers via a leading merchant processor, one that offers end-to-end payment processing solutions that support the payment needs of more than 1 million merchant locations in some 30 countries.
For Elavon, the deal centers more around the company’s own internal anti-fraud defenses than its merchant network, according to what Tim Miller, senior vice president, global credit and risk at Elavon, told PYMNTS. “But there is overlap, though,” he said.
Fraud targeting eCommerce, he said, is basically a many-headed beast, and can originate from pretty much anywhere around the globe including major metro areas in the U.S. and Canada. He said Elavon began looking at working with Brighterion AI even before the company was bought by Mastercard in 2017.
As for Adjaoute, the deal reflects the increasing focus on the merchant side of fraud threats, especially when eCommerce is involved. Not only that, but merchants also suffer a good amount of internal fraud, he told PYMNTS. “We have a lot of expertise in the acquiring field,” he said. As well, Brighterion says it analyzes some 100 billion transactions each year, with all that data helping to fuel the growth and capabilities of its artificial intelligence technology.
Among the AI-enabled tools likely to play a bigger role in fraud prevention are so-called smart agents.
Indeed, Adjaoute’s experience with medicine and military life provided vital lessons that now inform his work with smart agents.
First, people may share similar DNA and suffer from the same diseases, but effective treatment requires taking into account how one sick individual is different from other people — call that the aspect of personalization, a big part of the smart agent value proposition, at least in his telling. Second, his work in the military taught Adjaoute about dealing with “mission-critical” issues with “optimal” solutions that fix important problems — smart agents hold the promise of making consumer life (along with FI operations) safer, more efficient and more lucrative.
What this means for the payments world — and anti-fraud efforts on the part of acquirers and merchants — is that smart agents can bring a level of personalization that can be designed for incredibly specific tasks that are unique to the individual or customers. Such tasks might include the monitoring and analysis of specific transactional behaviors, or other signals that can spot fraud from further out than can people or systems based on machine learning.
A successful smart agent deployment also requires the technology to be able to adopt to changing, even unexpected conditions — trying to fight, say, malware attacks one by one is an impossible, frustrating path, so it’s better to let AI-enabled technology take the fruits of its lessons and apply them to future threats. And, of course, self-learning is another top capability for smart agents.
“Smart agents can apply to anything you want to design,” Adjaoute said. “It means putting intelligence around any concept. It’s so sophisticated.”
Successful AI also works to reduce the number of false positives when it comes to fraud protection and detection. Those are signals of potential but not certain fraud, and serve to increase friction on legitimate customers, tempting them to abandon transactions with merchants. All that is in play now via Brighterion’s deal with Elavon.
Artificial intelligence — the real AI, as Adjaoute defines it — is sadly in early days with the application of its power and potential for solving complex fraud problems like collusion, fake merchants and bad actors in the merchant acquiring space. It’s a problem that is harder to solve then it may otherwise appear on the surface. Adjaoute remarked being stunned at the news last week that more than 1.5 million business listings on Google were, in fact, for fake businesses.
“We have the tools to help everyone protect themselves,” he said, adding that Brighterion is now working with acquirers around the world, an expertise that could go with this new AI deal. This new entry into the world of acquiring promises to add fuel to that growth.