MasterCard releases new e-commerce fraud detection tool

MasterCard releases new e-commerce fraud detection tool

MasterCard has developed a service that provides online merchants with a predictive fraud score for card-not-present sales in real time to measure the likelihood that a transaction is crooked.

The system uses fraud detection models designed specifically for e-commerce, enabling merchants to evaluate a longer span of transaction history to deliver a fraud score that more accurately describes online cardholder behavior.

According to the Lexis-Nexis 2011 True Cost of Fraud Study, merchants incurred costs of more than $2.33 for every $1 of fraud committed, absorbing more than $102 billion in total losses in 2011.

Simulations conducted by MasterCard indicate that online merchants could realise a potential for 15-30% fraud loss savings by reviewing or automatically declining transactions deemed as high-risk by the using the new tool.

The service will be made available to US merchants and acquirers in May.

Comments: (1)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 29 March, 2012, 16:50Be the first to give this comment the thumbs up 0 likes

I remember reading a report that said online fraud loss was around US$ 6B. Even taking the Lexis-Nexis ratio of 2.33:1 at face value, total loss should translate to less than US$ 15B, which is far less than the claimed figure of US$ 102B. Something doesn't quite add up. Given that total US e-commerce volume is around US$ 500B, are we to believe that merchants suffer 20% in fraud losses?