Visa Inc. announced new analysis showing Visa Advanced Authorization (VAA) using artificial intelligence (AI) helped financial institutions prevent an estimated $25 billion in annual fraud making the global payment ecosystem safer for retailers and consumers.[i]
VAA is a comprehensive risk management tool that monitors and evaluates transaction authorizations on the Visa global payment network, VisaNet, in real time to help financial institutions promptly identify and respond to emerging fraud patterns and trends.
„Visa processed more than 127 billion transactions between merchants and financial institutions on VisaNet last year, and employed AI to analyze 100 percent of the transactions – each in about one millisecond – so financial institutions can approve legitimate purchases while quickly identifying and preventing fraudulent transactions.”, the company said.
„One of the toughest challenges in payments is separating good transactions made by account holders from bad ones attempted by fraudsters without adding friction to the process,” said Melissa McSherry, senior vice president and global head of Data, Risk and Identity Products and Solutions, Visa.
„Visa was the first payment network to apply neural network-based AI in 1993 to analyze the riskiness of transactions in real time, and the impact on fraud was immediate. By striking the right balance between human expertise and technology innovation, we continue to evolve our capabilities as new AI breakthroughs expand the realm of what’s possible.”
For financial institutions, friction in the payment process can lead to the abandonment of a payment card. A study by Javelin Strategy & Research revealed more than half of cardholders affected by false declines (51 percent) used a secondary payment card to complete the purchase at the same merchant, which can push a competitor’s card to the top of wallet.[ii]
However, removing friction cannot come at the expense of identifying and preventing fraud. As a survey by the National Retail Federation and Forrester discovered, the top payment-related challenge faced by retailers is fraud, cited by 55 percent of those surveyed.[iii]
Visa Advanced Authorization is a layer of fraud prevention that can help drive down risk and fraud for financial institutions and retailers, and help reduce friction due to false declines for payment account holders. More than 8,000 financial institutions in 129 countries use Visa Advanced Authorization.
Preventing fraud near the speed of light
Visa pioneered using neural networks modeled after the human brain to power its AI platform to identify possible fraud. This delivers faster and deeper insights through previously unknown correlations. Delivered through Visa Advanced Authorization, retailers and financial institutions benefit from:
. Machine Learning models used for real-time examination of each transaction for indicators of fraud – looking at activities, patterns and more than 500 risk attributes – all in about one millisecond.
. Risk scoring, which Visa shares with the account holder’s financial institution, where the decision is made to either approve or decline the transaction, or flag the transactions for follow up with the account holder.
. The ability to identify good transactions even when made by new or infrequent shoppers, reducing the likelihood of false declines.
. Real-time authorization using integrated, global predictive analytics to identify and prevent fraud.
Visa has kept global fraud rates at historic lows – less than 0.1 percent – through a multi-layered approach of investing in human intelligence and technology like A.I.; empowering consumers and clients with tools, resources and control to manage risk; and setting governance processes to help businesses and regulators stay nimble.[iv]
„Consumers identified Visa as the most trusted company to provide financial services or payments among all payment networks and we believe it is due to Visa’s unrelenting focus on eliminating fraud and protecting the payment ecosystem,” said McSherry.[v]
See how Visa’s artificial intelligence works to improve payment authorization in this video
For the 12 months ended April 30, 2019
[ii] „Addressing the Threat of False Positive Declines” by Kyle Marchini and Al Pascual, Javelin Strategy & Research, October 17, 2018
[iii] „The State of Retail Payments Report – Outlook for 2019” by Brendan Miller, principal analyst, Forrester, November 2018
[iv] Visa Global Fraud Data, Visa Inc., April 2019
[v] „Omnichannel and Branch: The Current U.S. Consumer Banking Environment,” by Peter Reville, Director of Primary Data, Mercator Advisory Group, March 2019
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