Source: Emerj | March 21, 2019
Author: Niccolo Mejia
Applications for artificial intelligence technology within the financial industry are most often focused on document search and fraud detection. This is especially true for large credit card companies such as Visa and Mastercard, who themselves provide technology to smaller businesses and card issuers.
Visa has been using and improving their fraud detection technology for a few years. They started a research initiative called Visa Research, which focuses primarily on AI applications for their company.
Visa Research focuses on deep learning for payments and scalable machine learning models, or machine learning models that can change the range of data used to determine conclusions based on the context of the request. They also focus on predictive analytics solutions for fraud detection.
In addition to AI, the initiative also studies advances in cryptography, the security of distributed endpoint systems such as APIs and cloud-based solutions. The initiative also researches methods of secure data acquisition and analysis. This could include proper anonymization of customer spending data as well as fraud prevention for the handling of that sensitive data.
In this article, we investigate the AI projects and initiatives at Visa and detail the most prominent of them. We clarify which aspects of the technology are actually powered by AI and which are not. This investigation includes some minor evaluations of software vendors that Visa is working with on collaborative projects.
The AI initiatives covered in this article are listed as follows:
- Detecting Credit and Debit Card Fraud
- Visa ID Intelligence – AI Consulting Services
- Finance and Travel Chatbots
Our investigation into Visa’s AI initiatives begins with their chief fraud detection technology, known as Visa Advanced Authorization.
Detecting Credit and Debit Card Fraud
Visa’s most developed AI initiative is called Visa Advanced Authorization, which is a predictive analytics application for detecting fraudulent transactions in real time. It is important to note that Visa Advanced Authorization has been the company’s solution for fraud detection for over a decade. We can infer that the technology has undergone some kind of update since that time because true machine learning solutions would not become widely available until the 2010s.
The company claims Visa Advanced Authorization is able to identify data points among specific transactions that correlate to a higher degree of fraud risk for the transaction. They state the technology can identify up to 500 unique attributes per transaction, but the examples they provide may not be as granular as one might expect. The software purportedly discerns if the transaction in question is taking place at a store where the cardholder usually shops.
Visa also details the software’s ability to detect if the transaction is with a high-value seller, such as electronics dealers or jewelry stores. The time of day and the amount of money spent are also factored in, and all of this information is compared to all aspects of the customer’s spending patterns. This may include fluctuations in customer spending patterns during the holidays or vacations.
The company states the software uses the detected risk attributes, or aspects of customer behavior that correlate with fraud, to score transactions based on risk of fraud. In this system, the number 1 poses the least risk and 99 poses the most risk. If a transaction’s score passes a certain threshold, the number of which is unclear, the system will decline the payment to prevent the fraud from occurring.
Visa claims to have made it possible for Visa Advanced Authorization to compare transactions against two years worth of the customer’s transactional data. They claim this makes it easier to recognize rarer but non-fraudulent transactions and spending habits as well as identify legitimate transactions that may have seemed risky in the past. Visa implemented this in order to reduce the number of false declines issued by the software.
The Advanced Authorization technology is also bolstered by Visa’s Mobile Location Confirmation feature. The feature allows customers to opt in on their mobile device and allow Visa access to their geographical location. This location information is then used to prevent Visa Advanced Authorization from declining the user’s card just because they are traveling and possibly buying something out of the ordinary.