According to a report by CNBC published earlier today, Mastercard has announced a significant step in its efforts to combat fraud in cryptocurrency transactions.
The financial services giant is partnering with Feedzai, a regulatory technology (RegTech) platform specializing in using artificial intelligence (AI) to identify fraudulent payment transactions and minimize risk in the financial services, retail, and e-commerce industries.
Here’s a brief overview of what they do:
- Fraud Detection and Prevention: Feedzai develops AI and machine learning algorithms designed to detect and prevent various types of financial fraud. This includes credit card fraud, payment fraud, and other types of banking fraud.
- Real-Time Analysis: One of the key features of Feedzai’s technology is its ability to analyze transactions in real-time. This means it can identify potentially fraudulent activity as it happens, allowing for immediate action to prevent fraud.
- Big Data Analytics: Feedzai’s systems are capable of processing and analyzing large volumes of data. This includes transaction data, customer behavior patterns, and other relevant information, which helps in accurately identifying fraudulent activities.
- Customizable Solutions: They offer solutions that can be customized to the specific needs of different businesses and financial institutions. This means that their technology can be adapted to different types of transactions, customer profiles, and risk management requirements.
- Risk Management: Beyond fraud detection, Feedzai’s platform also assists in broader risk management. It helps financial institutions assess and manage the risk associated with various transactions and customer activities.
- Compliance: Feedzai’s solutions also help financial institutions comply with various regulatory requirements related to financial crime and money laundering.
- Global Reach: The company serves a global market, providing solutions to banks, payment platforms, and other financial services providers around the world.
CNBC says that the collaboration will see Feedzai’s technology directly integrated with Mastercard’s CipherTrace Armada platform, which is instrumental in monitoring transactions from over 6,000 cryptocurrency exchanges, identifying potential fraud, money laundering, and other suspicious activities. Unlike traditional API-based integrations, Feedzai will directly “inhale” data from CipherTrace Armada, enabling real-time alerts on dubious crypto transactions.
Nuno Sebastio, CEO and co-founder of Feedzai, explained to CNBC the significance of this partnership. He highlighted that approximately 40% of scam transactions currently move from bank accounts to crypto exchanges. The integration aims to protect consumers from fraud and identify potential money laundering activities and mule accounts, which are often exploited by fraudsters to launder illicit funds.
Feedzai’s RiskOps platform, as reported by CNBC, analyzes transactions worth over $1.7 trillion annually. The company, with headquarters in Portugal and California, holds close to 100 patents, securing an average of 10 patents yearly to protect its technology.
This move by Mastercard, as CNBC notes, signifies a broader push to legitimize cryptocurrency as a mainstream financial asset, subject to the same regulatory and compliance frameworks as traditional assets. CNBC goes on to say that despite the growing interest from banks and financial institutions in incorporating crypto into their services, the deployment of commercial crypto products remains challenging due to regulatory uncertainties and associations with fraud and scams.
CNBC also notes that Mastercard’s vast network, utilized by banking institutions globally for payment processing, places it in direct competition with Visa and other fintech service providers. It points out that in the U.K., several major banks have shown reluctance in associating with crypto, with some halting transactions with crypto exchanges due to fraud risks.
Ajay Bhalla, president of cyber and intelligence solutions at Mastercard, conveyed to CNBC the heightened risk of fraud in crypto transactions compared to regular fiat transactions. With the new partnership, Mastercard aims to distinguish legitimate transactions from fraudulent ones more effectively.
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