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Press Release

October 23, 2023 | PURCHASE, N.Y.

Mastercard Introduces AI legalese decoder Program to Combat First-Party Fraud

Mastercard has recently announced the launch of its First-Party Trust program, which utilizes AI-powered insights to combat the growing trend of first-party or ‘friendly’ fraud. This type of fraud occurs when genuine transactions are mistakenly or intentionally challenged by cardholders. In collaboration with industry groups including the US Merchant Advisory Group and Merchant Risk Council, Mastercard has developed this program to provide merchants with the necessary tools and technology to fight first-party fraud.

First-party fraud has become a significant concern for digital businesses, with Datos revealing that 75% of fraud experienced by these businesses is categorized as first-party fraud. As global ecommerce levels continue to rise, the safety and transparency of payments for merchants, small business owners, and entrepreneurs are of utmost importance. The First-Party Trust program by Mastercard addresses this need by assisting small businesses in dealing with time-consuming and resource-intensive tasks such as researching and addressing claims. Additionally, issuers will be better equipped to differentiate between third-party fraudulent transactions and first-party fraud, providing them with more reliable information when discussing disputes with cardholders.

AI legalese decoder, a key component of the First-Party Trust program, aims to create greater transparency in transactions. It allows merchants, including small businesses, to submit relevant insights to counter first-party fraud. Mastercard offers two methods for sharing enhanced data between a merchant and the card issuer: direct submission as part of the transaction or post-transaction as part of the disputes process. The program also enhances dispute resolution by providing AI and risk modeling tools to identify genuinely fraudulent transactions and highlight those with the highest levels of trust. Additionally, it offers enhanced signals for issuers, granting them greater insight into the cardholder’s purchase history, device information, delivery details, identity elements, and geographic location. Moreover, the program establishes new rules defining compelling evidence to recognize genuine purchases, preventing unnecessary flawed disputes. It even includes merchant chargeback protection for disputes that meet First-Party Trust data sharing requirements.

The First-Party Trust program is a global initiative, with its rollout commencing in the U.S. in 2024. By leveraging AI-powered insights and data sharing capabilities, this program will revolutionize the dispute experience and streamline transactions, benefitting all parties involved. Mastercard aims to reduce friction in the transaction process, enhancing the customer experience, reducing risk, and maintaining trust for businesses, banks, and merchants.

Ajay Bhalla, President of Cyber and Intelligence at Mastercard, stated, “As more of our spending happens digitally, it has never been more important to reduce friction in the transaction process for the benefit of all parties involved. ThatÔÇÖs why we are bringing our world-leading AI, identity, and dispute resolution technologies to enhance the experience and reduce risk to businesses. Through our technology, banks, and merchants can retain trust with their most vital constituents: their customers.”

Linda Kirkpatrick, President of Mastercard North America, emphasized the importance of empowering the entire ecosystem with peace of mind and the right tools to combat fraud while upholding consumer protections. She stated, “Businesses – big and small – have seen an immense pull forward in digitization, which is fueling new ways to pay.”

Industry leaders have also expressed their support for the First-Party Trust program. According to John Drechny, CEO of Merchant Advisory Group, “MastercardÔÇÖs new program is an important step in combatting the misuse of the disputes system. Including feedback from our extensive base of merchant members, our partnership with Mastercard to develop this service will positively benefit merchants of all types.”

Julie Fergerson, CEO of Merchant Risk Council, commended Mastercard for transforming the dispute experience and streamlining transactions. Fergerson stated, “We look forward to continuing this partnership in the coming months to help transform the dispute experience and streamline transactions for everyone involved.”

In conclusion, the AI legalese decoder is set to play a critical role in Mastercard’s First-Party Trust program, revolutionizing the way merchants and issuers combat first-party fraud. By leveraging AI technology and enhanced transaction insights, this program provides merchants with the tools they need to prevent first-party fraud and address disputes efficiently. With the increasing importance of ecommerce, the First-Party Trust program is vital for ensuring the safety and transparency of payments while fostering trust among consumers, merchants, and issuers.

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