Artificial intelligence that prevents Internet fraud

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To begin with, we need to understand how artificial intelligence works. If we look back at the analytics in 2017, it’s clear that machine learning and artificial intelligence are going to be the next big things. They will let us solve almost any problem, be it writing the lyrics of a song or even curing any disease. We all get curious when we see or hear about new inventions. 

So are those analytics correct, or just aspirational? Let’s find out. 

Overview 

The e-commerce business is persistently gaining grip in Hong Kong. Around 88% of Hong Kong residents have shopped online in the last year. Apparently, the majority of the shoppers were under the age of 30, according to Nielsen Corp. 

Almost 41% of the total online orders were placed on mobile devices. Clothing made up 52% of those orders, while airline tickets made up another 41%. Amazingly, the total sum they spent on clothing was four times what Americans spent. 

How AI Prevents Payment Fraud 

Despite the fact that online shopping is becoming progressively common, cyber security is also grabbing attention and rising as a new concern. Luckily, incredible development in machine learning and artificial intelligence in the past couple of years has facilitated the decrease of payment frauds, as stated in a report by technology experts. 

“Online shoppers must get aware of the cybersecurity threats. Individuals who use free public Wi-Fi while shopping online perhaps conveniently fall prey to the hotspot con,” said Erwin Huang, an associate professor of entrepreneurship at the Hong Kong University of Science and Technology. 

“Hackers might have set bogus hotspots connections providing free Wi-Fi located near or inside public cafes, which enables them to conveniently steal mobile users’ sensitive information, such as passwords, credit card details and other personal information.” 

Huang believes that people should depend on their 4G mobile data provided by their networks if they are uncertain about the source of public Wi-Fi. He also mentioned that mobile users could even use second level authentication. 

In simple terms, by the time you type in your login and password, the trader would send you a series of codes through text message in order to complete the transaction. These methods could ensure that no one can access your account, even if the hackers have taken your password. 

Nevertheless, some users might find it tiresome and annoying, for the plain reason that they have to give extra information during the checkout phase. 

We will be detailing four methods/tips to keep your transactions safe. Visa organized the Visa Security Summit at the beginning of 2017 in South Korea, to ensure security for online payments. It was done with the intention to announce and highlight the number of initiatives taken to improve the user experience, as well as payment security. They concluded it could be done by protecting data, devaluing data, interlinking the data, and empowering consumers to find solutions about the threats they can overcome. 

Possible Solutions 

We need to think more about possible safety threats so we can overcome them accordingly. First of all, there’s the Payment Card Industry Data Security Standard, for which institutions are required to encrypt cardholders. This counts all the data that they have collected, processed, transmitted, and stored. It is technology which is basically utilized to protect credit card information by replacing the card number with unique tokens, in order to keep the stolen account safe from hackers. Even if they get hold of it, they cannot make forged transactions. 

Visa transaction controls give cardholders the ability to regulate their credit card consumptions’ settings. For an instance, they are able to suspend overseas activity, halt charging for online games, or set a spending limit for all online transactions taking place through that card. Such settings authorize consumers to lessen their probability of being victims of fraud. 

Some cards also have launched 3-D Secure 2.0. This particularly benefits issuers and merchants to differentiate between good transactions and bad, which allows transactions to keep happening constantly at lightning speed. The latest version of the technology supports a real-time, protected, information-sharing pipeline that merchants can utilize and take advantage of, while sending an outstanding number of transaction features which the issuer can use to validate customers in a more appropriate manner, without always asking for a static password or slowing down the usual business. 

Learning Customer Behaviour 

3-D secure 2.0 is popularly perceived as one of the latest transaction authentication methods embraced in payment security. It has proven to be the strongest tool. For example, if I am in California in the morning, and an online transaction is spotted in London in the evening, and then one more in New York before midnight, artificial intelligence could easily recognize that there is fraudulent activity involved. Therefore, it reinstates the fact that recording customer practices not only helps in ensuring security, but also sometimes offers superior experiences to customers. 

It is also speculated that the emerging drift towards experimental consumerism is going to have a great impact on marketing. If you come across the Airbnb app, you will soon notice a number of diverse experiences instead of hotel options, like learning classical dance in India, or spending a couple of days with the wolves in Californian forests. 

How it Works 

Artificial intelligence reads your behaviours and interests. That is how it picks up your inclinations while you interact with or through the system. If you want to celebrate your anniversary somewhere near a beach with friends, or if you like to collect something, AI will come up with such information following your online activity. 

You may start seeing ads popping up in your searches which are somewhat related to your interest, and surprisingly enough, you won’t find such distractions infuriating. However, you usually do not even check the price unless you decide to purchase something. Nonetheless, on top of everything, consumers are now more concerned about user experience than any discount or sales offers. 

History vs. Predictions 

Back in 2016, some transactions were blocked due to some alarming indications that made them appear fraudulent. However, the total of those false positives amounted to $493 billion, while the losses caused by fraud--$26 billion--were slightly higher than in 2015 as compared to 2016. Another study says merchants are now dropping $17 for each fraudulent dollar blocked. 

While researching further, I discovered some interesting figures for Latin America. In 2016, e-commerce sales in that region surpassed $57 billion.  The market, however, is not too big due to the fear of fraud. Credit card holders are afraid to shop online. They also do not trust the banks to validate false transactions. In Mexico, the amount of e-commerce genuine transactions dropped to 14%, and in Peru, it is predicted to touch 60%. 

Fraugster 

To encounter this situation, we have Fraugster, a German-Israeli payment security company. Fraugster is also one of the selected FinTech companies that will integrate with Finconecta. 

Fraugster utilizes machine learning methods to impersonate the thought process of human analysts, instead of developing systems constructed upon human regulations. It possesses an in-memory database as well, which gives control to their artificial intelligence engine. 

Fraugster enriches each and every transaction taking place. It estimates an average of 20 to 60 data points per business deal. As such, it monitors the name, billing, shipping address, and thousands of additional data points in order to grab enhanced insights into the user’s behavior, and produce an accurate decision in less than 15 milliseconds. 

Fraugster is acknowledged as one of the top 21 companies using artificial intelligence to shape next-generation solutions to financial services. This company is also joining forces with leading global payment companies such as Credorax, Ingenico, and Wirecard, to name a few.   

The Bottom Line 

The internet has made life easier and more hassle-free, even when it comes to making the biggest transactions. Everything is online. Unless you have a worthy connection such as Charter internet where you just pay an affordable price for availing the services, everything else is free on the internet. We get billions of sources and piles of information just after we search for a single word, and without any additional cost.   

But nothing is free at every stage. Many platforms require your basic information. That is how artificial intelligence is creating our profiles in their databases, so they can influence us at times to buy certain products. However, as far as the internet frauds are concerned, AI will lead us to a secure and safe internet by filling loopholes.    

Henry Sinn, Network Engineer at Spectrum Internet 

Image Credit: Enzozo / Shutterstock