E-Commerce Merchants Use Artificial Intelligence to Protect Against Fraud

    Ai Credit Card Fraud

    SIX Payment Services, an e-commerce merchant services provider, recently announced a groundbreaking innovation in protection against fraud that utilises artificial intelligence (AI). This Ai commerce platforms in the near future.

    Technology that safeguards against fraud and other malicious activity is constantly being developed and refined. There is no wonder that fraud is such a target of merchant service companies – it is estimated that businesses across this industry lose a startling 1.5% of their annual revenue (approximately $29 billion) to fraud. Unfortunately, fraud is only on the rise, too – criminals are increasing in numbers and in level of sophistication. As such, is important that protective technology evolves at the same rate.

    Some companies have resorted to implementing strict rules in regards to suspicious transactions, and any transactions deemed fishy are blocked. However, research shows us that this method may be alienating users: 6 out of 10 consumers never returned to a merchant that blocked their transactions. This strategy to protect against crime is deterring customers, which begs the question, “is there another way?”

    You’ll be pleased to know that SIX’s newest revolutionary service answers with a resounding “yes”!

    SIX Announces “Fraud Free” With Fraugster

    In collaboration with e-commerce security company Fraugster, SIX are offering the most effective and secure solution to protecting merchants from fraud: Fraud Free. Fraugster was founded in 2014 and ever since has been committed to developing an AI-powered fraud detection system. They claim that this system works by learning from each real-time transaction and actually anticipating fraudulent attacks in advance.

    In an interview in 2017, CEO and co-founder of Fraugster, Max Laemmle, stated: “We founded Fraugster because the entire payment risk market is based on outdated technology. Existing rule-based systems as well as classical machine learning solutions are expensive and too slow to adapt to new fraud patterns in real-time. We have invented a self-learning algorithm that mimics the thought process of a human analyst, but with the scalability of a machine, and gives decisions in as little as 15 milliseconds.

    […] At the heart of our AI engine is a very powerful algorithm which can mimic the thought process of a human analyst reviewing a transaction. As a result, we can analyse the story behind every transaction and say with precision which transactions are fraud and which aren’t.”

    Not only can this AI-powered engine predict fraudulent attacks in advance, but it can also recognise where transactions aren’t fraud, which will cut down the number of false positives that result in the unnecessary blocking of innocent transactions. This is good news for consumers, who have low tolerance for such mistakes.

    Roger Niederer, Head of Merchant Services for SIX Payment Services, explains the decision to technology from Fraugster in their fraud protection measures: “We help our merchants to minimise their [cost of] fraud and maximise sales: Fraud Free by SIX is a perfect addition to our range of value added services. Merchants that ‘ensure’ their transactions can expect to have less worry about fraud and chargebacks as Fraugster is taking over the liability. Plus: significantly fewer rejections of non-fraudulent transactions results in an improved conversion rate, generating a revenue uplift of up to 15%.”

    Overview of Benefits

    There are a range of benefits offered by the decision of SIX Payment Services to include AI-powered technology in protection against fraud. It is likely that the number of merchant service providers incorporating these features will increase over time, as the Fraud Free service offers the most effective anti-fraud protection with low-cost and low-risk for businesses. Decisions on whether a transaction is fraudulent or not can be processed in a matter of milliseconds, and the number of false positives is reduced dramatically. SIX also claim that chargeback rates are reduced immediately when you use their system, and the cost of operation falls.

    Not all people are welcoming of AI-powered technology, but there is no denying that this programs are transforming the industry as we know it. Fraugster are setting a new standard for security measures and anti-fraud action with their program, and a growing number of merchant service providers are getting involved: Ingenico, Credorax and Currencies Direct to name a few. Now SIX Payment Services have secured a place on the ever-growing list of e-commerce merchant service businesses using Fraud Free.


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