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Mastercard Reinforces Fight Against Crypto Fraud Through AI Partnership

Lanon Wee

Exclusively on Monday, Mastercard informed CNBC that it had formed a partnership with Feedzai, a regulatory technology platform, so as to enhance the prevention and detection of fraud associated with cryptocurrency. CipherTrace Armade, Mastercard's platform used by banks to monitor transactions from the over 6,000 crypto exchanges, will adopt Feedzai's integration. This shift is indicative of Mastercard's major foray into the crypto realm with a focus on eradicating fraud and scams. Mastercard has announced a partnership with Feedzai, a regulatory technology platform, that is designed to strengthen efforts to protect against fraud and money laundering that is routed through cryptocurrency exchanges. Mastercard's CipherTrace Armada platform, which tracks transactions from over 6,000 crypto exchanges, will be seamlessly integrated into Feedzai’s platform. This will create real-time alerts about suspicious crypto transactions, in addition to protecting unsuspecting users from scams. According to Feedzai data, around 40% of scam transactions go from a bank account to a crypto exchange without detection. Furthermore, Feedzai's RiskOps platform analyzes transactions worth over $1.7 trillion annually. With its AI capabilities, Feedzai is able to identify and block suspicious transactions within nanoseconds while also recognising legitimate ones. Nuno Sebastio, CEO and Co-founder of Feedzai commented, “Numerous banks that believe they are preventing illegitimate cryptocurrency transactions are, in fact, only blocking transactions involving the widely recognised and regulated entities within the crypto space and omitting the rest." This action signifies Mastercard's effort to make cryptocurrency an accepted mainstream financial asset, which can adhere to the same regulations and compliance procedures as regular assets. Banks and other large financial institutions have become interested in exploring the potential of crypto for their products and services; yet, they have been hesitant to integrate crypto into their core offerings, largely due to regulations and the risk of fraud. According to data from blockchain analysis firm Chainalysis, crypto-related losses globally increased by 79% in 2021 compared to the previous year, with illicit addresses receiving nearly $14 billion. As a payments giant, Mastercard offers its vast network to banks for processing and monetizing payments, rivaling Visa in the same field. Unfortunately, numerous major U.K. lenders, including JPMorgan, NatWest, and HSBC, have restricted or blocked crypto transactions, which has met criticism from Coinbase CEO Brian Armstrong, who disputes the U.K. enthusiastically working to become a global "web3" hub. In response, Ajay Bhalla, president of cyber and intelligence solutions for Mastercard, said "interconnectedness of life today and increasing digital penetration of finance has brought risk as well as opportunity." He added that Mastercard had discovered that fraud on transactions for crypto purchases is five times higher than regular fiat transactions, and partnering with Feedzai is a means of detecting "good transactions from bad." This builds upon Mastercard's 2021 acquisition of U.S. blockchain sleutching firm CipherTrace; launching CryptoSecure the following year, the product uses CipherTrace's technology to analyze and block transactions from fraud-prone crypto exchanges.

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