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Mastercard Discusses How to Fight Fraud with Artificial Intelligence

In episode 3 of Tech Lightning Rounds, Beth Kindig goes directly to the source of artificial intelligence expertise and hosts discussions with technologists who specialize in the field. Interviews are held in “lightning round” format, which are rapid interviews with tech experts for immediate depth on each topic.

Mastercard pioneered the idea of electronic payments, and in many regards, was the first “fintech” company in the market. With this follows great responsibility, especially as the Association of Certified Fraud Examiners reported a 42% frequency of fraud across small businesses costing an average of 5% of gross revenues. Mastercard is using artificial intelligence and natural language processing in unique ways to combat fraud and money laundering.

In this podcast, Ann Cairns, Executive Vice Chairman of Mastercard discusses the following ways AI can be used in the financial industry including how to fight fraud:

  • AI can detect if someone has taken your phone and is using your banking applications as each person holds a phone unique to them including how a person holds their head and makes key strokes.
  • Natural language processing can detect if money is being moved suspiciously and split, or recombined, in unnatural ways. Financial companies, including Mastercard, can light up the movements on a dashboard and track the money as if they were “tracking the spread of a virus” to help fight fraud.

Cairns also discusses how small shopkeepers in emerging markets can access capital to grow businesses and the efforts Mastercard is making to create a more inclusive environment in the financial markets.

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Mastercard has beaten many of the FANG stocks over the last year with a return of 30% and is currently at $245 per share up from $175 at December lows. MA can be described as having one foot in the present and one foot in the future. The business model has done well due to the “disintermediation of cash/checks” and an increase of dominance in the payments eco-system, while also building out artificial intelligence opportunities and envisioning a future where credit cards and smartphones are not needed for more seamless payments through the use biometrics.

Last month, Mastercard topped earnings estimates by reporting $1.78 earnings per share compared to the consensus of $1.66 EPS. The company had $3.89 billion revenue for the quarter, up 9% from a year-ago quarter. Visa also beat earnings with an 8% revenue climb to $5.45 billion with $1.31 earnings per share. Both Mastercard and Visa have been trading at record highs. Recently, Visa beat Mastercard in a bid to buy Earthport for $320 million. The UK-company is a pioneer in cross-border payments.

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Beth KindigI’m an industry insider who writes free in-depth analysis on public tech companies. In the last 12 months, I predicted Facebook’s Q2 crash, Roku’s meteoric rise, Uber’s IPO flop, Zoom’s IPO success, Google’s revenue miss and more. Be industry-specific. Know more than the broader markets. Sign up now. I look forward to staying connected.

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