Mastercard partners with Microsoft to tackle digital fraud

Dan Berthiaume
Senior Editor, Technology
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Mastercard and Microsoft are stepping up digital authentication.

Mastercard is enhancing its ability to authenticate digital consumers at the moment of purchase.

Global payments technology company Mastercard is launching an enhanced identity solution designed to improve the online shopping experience and prevent digital fraud, in a new collaboration with Microsoft Corp. Mastercard is integrating next-generation authentication and real-time decisioning intelligence capabilities into its existing digital transaction insights solution.

The solution pairs Mastercard’s network insights with a retailer’s own data to confirm a digital consumer is who they claim to be. This authentication provides financial institutions with additional intelligence to optimize their authorization decisions and approve more genuine transactions.

The Mastercard digital transaction insights solution is used across a range of online checkout instances, including click-to-pay functionality, wearables, digital wallets, and in-app purchases.

As part of the new collaboration, the Microsoft’s Dynamics 365 Fraud Protection platform’s proprietary risk assessment capability, which leverages adaptive AI to assist in real-time fraud detection by identifying risky behaviors across purchase, account and in-store activities, has been integrated with Mastercard digital transaction insights.

As a result, the companies intend to enable issuers to enhance their decision-making processes for authorizations, chargebacks and refunds.

Online shopping fraud is on the rise
Mastercard and Microsoft are releasing this new digital authentication functionality as fraudulent online transactions rapidly increase. Reports of online shopping fraud more than doubled in 2020, and for the first half of 2021 fraud numbers continued to be far higher than pre-pandemic levels, according to a recent study by fraud management platform Riskified. The study cited latest the report to Congress by the Federal Trade Commission.

The late 2021 study analyzed changes in fraud levels for different categories as observed by Riskified during the 2020 holiday season, benchmarked against January of that year. Cosmetics ranked highest in fraud levels, with a 47% increase in fraud attempts. The sneakers category saw an 8% increase in fraud attempts, and digital services and children’s items rounded out the list, with a 12% and 15% increase in fraud attempts from 2020, respectively.

The report also found that fraud attempts related to buy online pickup in store rose during the 2020 holiday season. Compared to January of that year, by December there were over four times more fraud attempts through BOPIS orders. Compared to all other fulfillment methods, BOPIS was 50-70% riskier than average during the fourth quarter of 2020.

“Shopping online should be simple, quick and secure,” said Ajay Bhalla, president, cyber and intelligence at Mastercard. “But that isn’t always the case. We’re committed to developing advanced identity and fraud technology to help enhance the real-time intelligence we provide to financial institutions around the globe. This builds on our longstanding commitment of working across the industry to provide advanced technologies that enable trust, and help build a safe and thriving digital ecosystem for all.”

“We are excited to partner with Mastercard to leverage our cloud-native, cutting-edge fraud assessment tools to empower issuers and merchants to prevent more fraud and approve more genuine users,” said Charles Lamanna, corporate VP of business applications and platforms at Microsoft. “This partnership lays the foundation for the future of global fraud prevention where data silos are no longer a barrier to security.”