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Global payment fraud losses are expected to increase by 8.5% annually to hit $31 billion by 2020 and cost merchants 7% of their annual revenue, according to data provided by First Data. These costs are rising as fraudsters migrate to weaker channels, like e- and m-commerce, and try different approaches, per Javelin. As sellers look to widen the payment methods they choose to accept in response to shifting consumer demands, they must carefully manage the increased impact of fraud and the growing set of risks. 

Business Insider Intelligence spoke with Amanda Stanzione, the vice president of merchant fraud solutions at First Data, about how the firm changed its approach to fraud prevention by using AI to better protect enterprise merchants and their customers in this dynamic environment.

first data challengeBI Intelligence

Rule-based systems, which set relatively simple guidelines for when a transaction might be declined, have historically been the standard for fraud prevention, but they're no longer adequate on their own. For example, with these systems, a card may be declined if it's used at the same store within "a [several day or several hour] period," per Stanzione. While these tactics can prevent some fraud, they’re too simple for the emerging commerce environment, where new forms of buying are enabling new types of attacks — like spoofing, which involves a fraudster pretending to be a genuine user — and merchants are enabling new payment solutions, like [...]