Artificial Intelligence in Practice

38Mastercard: Using Artificial Intelligence To Cut Down The “False Declines” That Cost Businesses Billions Each Year

Mastercard processes billions of transactions every year, forming a crucial link between thousands of banks and millions of merchants.

In 2017, it acquired Brighterion to complete its mission of rolling out artificial intelligence (AI) technology across its entire network.

Its aim was to enable automated, machine learning-driven decision making at point of sale, online and offline, to ensure a secure yet smooth shopping experience at the point consumers hand over their card details.

What Problem Is Artificial Intelligence Helping To Solve?

“False declines” occur when a legitimate card transaction is incorrectly declined due to being flagged as suspicious and potentially fraudulent. As well as being inconvenient for customers, who in an increasingly cashless society may be left with no alternative way to pay, they cost US businesses $118 billion per year in lost revenue. This staggering figure is some 13 times higher than the actual cost of the fraud.¹

These false positives have serious negative consequences for consumers’ brand loyalty – Mastercard's research found that one-third of us have stopped shopping at a retailer due to having a payment declined for apparently no good reason.²

Although false declines are expensive and inconvenient, using traditional methods of payment verification, based on static rules and datasets, they are somewhat inevitable.