Mastercard Says AI vs AI Will Be Fraud Prevention’s Future

Mastercard says artificial intelligence (AI) is contributing to “unprecedented” levels of fraud and cybercrime.

It may also be among the business world’s best defense against those threats, the payments giant said Monday (March 9) as it issued a report in tandem with Fraud Prevention Month.

“Fraud and cybercrime are escalating at unprecedented scale, eroding consumer trust and threatening the health of businesses globally,” Michele Centemero, executive vice president of services for Mastercard Europe, said in a news release emailed to PYMNTS.

“But the payments sector is fighting back. By working collaboratively across borders and applying the might of AI, we are building a fraud prevention ecosystem that offers end-to-end protection for merchants and consumers, enabling people to transact with confidence, speed and choice, however they choose to pay.”

Among the most common types of fraud are social engineering scams, the report said. Scammers use “deception and emotional manipulation” to foster a false sense of trust and urgency, and convince victims to turn over sensitive information or take “financially harmful actions,” Mastercard said.

“Caution around any unsolicited requests, verifying identities before sharing personal information, and avoiding suspicious links or attachments can help protect individuals from harm,” the report added.

Looking to the future, the report argues that the next stage of defense “must be AI vs AI,” employing systems that can “learn, predict and act in real time.”

“As autonomous agents begin to transact on behalf of humans, authentication and defence will shift to verifying identity and intent in real time,” the report said.

Mastercard also projects the rise of “security-by-design” among retailers, who will increasingly turn to payment partners to embed cybersecurity measures “across every layer of commerce.”

Research by PYMNTS Intelligence and Block has shown that banks are turning to technology such as AI amid a rise in fraud instances.

The research shows that 71% of total fraud incidents and dollar losses are now tied to unauthorized-party schemes, a sharp increase from 48% last year. Sixty-eight percent of financial institutions said they had spent more on fraud-detection year over year, while 46% said they were witnessing increasing sophistication in fraud schemes.

“The resurgence of unauthorized access reflects a broader evolution in tactics. Fraudsters are exploiting credentials, manipulating payment information and targeting faster payment rails,” PYMNTS wrote.

“As shown in the report’s breakdown of fraud types, digital payment fraud and compromised credentials account for a growing share of both transaction volume and dollar value. This is not static crime. It adapts. Institutions respond. The cycle repeats.”