One of the most pressing issues for anyone using a credit card, processing a credit card or accepting a credit card is fraud. Massive institutions from Target to Arbys to Holiday Inn and more have fallen prey to widespread data breaches.
With technology continually getting more and more sophisticated and nefarious hackers expanding by the day, technology has to battle to keep pace with those looking to hack into accounts.
However, in addition to fraud there is another issue plaguing merchants that accept credit cards. Many cards are declined for one reason or another when they should not be. Credit card fraud is damaging, but estimates project that merchants lose approximately $118 billion annually due to credit card declines where the potential customer is not actually over their limit. That’s roughly 15% of all transactions. Of these cardholders, nearly 40% abandoned their card after the false decline.
When a customer is falsely declined there is a strong chance that the merchant has lost that customer forever. After all, having a card declined in public is embarrassing and certainly makes customers want to take their business elsewhere.
Below we take a look at some of the technological breakthroughs in place to combat false declines and other issues affecting credit card processing.
MasterCard has recently instituted artificial intelligence to mitigate issues of false credit card declines. Traditionally MasterCard’s parameters for declines have been exceedingly rigid and slanted toward declining so as to be sensitive toward potential fraud. However, the downside has been the rash of false negatives.
The new artificial intelligence instituted by MasterCard has a decision intelligence engine programmed into the technology to help eliminate false declines and enable merchants to process more transactions and keep their customers happy.
MasterCard processed nearly 14.5 billion transactions in its most recently reported quarter. That should provide more than sufficient data to properly educate its machine-learning technology. It is also a large enough sample size to point out issues and improve areas that need improvement.
As the technology improves, competitors like Visa, Discover and American Express will hopefully also adopt strategies using machine learning and artificial intelligence to combat the issue of false declines.
This technology is most certainly a boon when it comes to limiting false declines but it is certainly not an end-all solution for merchants. While the artificial intelligence is designed to root out the false declines it certainly is not the answer when it comes to eliminating fraud.
Hackers are still working overtime to hack into systems to abscond with credit card numbers. However, the success of artificial intelligence and machine learning in helping to cut down on false declines show that the same technology can be effective when comes to reducing hacking and fraud.
Smart technology that can adopt changes on the fly and make decisions to thwart malicious attacks in real time is the future of putting a permanent stop to credit card fraud, which enables merchants to collect more money and keep their customers happy and purchasing products and services for years to come.
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