Transcript Global View - DT Fraud Conference

Global View
MasterCard
Keith Groves, VP Customer Fraud Management
MasterCard Franchise Integrity
FRAUD LOSSES
Global Fraud
©2016 MasterCard. Proprietary and Confidential
FRAUD LOSSES
Global Fraud
©2016 MasterCard. Proprietary and Confidential
FRAUD LOSSES
Global Fraud
©2016 MasterCard. Proprietary and Confidential
ISSUER SECURITY TRENDS
Consumers are changing how they shop, connecting
through more channels and devices.
New consumer
interaction points are
growth opportunities
but increase the
complexity of
managing fraud.
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ISSUER SECURITY TRENDS
As digital touchpoints multiply, card-not-present
authorization becomes more complex and vulnerable.
DEVICES IN USE GLOBALLY2
CHALLENGE
CONNECTED CARS
18,000,000,000
Keeping pace with the demand for
convenience, usability and security
through every relevant device―as
consumers shift from one digital
device to the next
WEARABLES
CONNECTED TVS
16,000,000,000
14,000,000,000
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12,000,000,000
INTERNET OF THINGS
the average
number of digital
devises consumers
are currently using1
10,000,000,000
8,000,000,000
TABLETS
6,000,000,000
OVER HALF OF ALL FRAUD NOW ORIGINATES
THROUGH DIGITAL CHANNELS.2
4,000,000,000
SMARTPHONES
2,000,000,000
PCs
0
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
est.
est.
est.
est.
1: BI Intelligence Estimates
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1. In 17 countries. Digitas, Connected Commerce Survey 2015.
2. eMarketer: Worldwide Ecommerce Sales to Increase Nearly 20% in 2014, July 23, 2014
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ISSUER SECURITY TRENDS
Reporting over half of all global fraud, the booming digital
environment is the latest playground for fraudsters.
Fraud losses and costs are escalating with
acceptance of new payment types.
MERCHANT
0.68%
$3.08
In addition to losing 0.68% of revenue
to fraud, merchants paid $3.08 for
every dollar of fraud in 2014.
Issuing banks continue to lose more from CNP
fraud than any other type.
ISSUER
$6.4B
$2.9B
In the US alone, issuer CNP fraud losses increased to $2.9B
in 2014, and are estimated to reach $6.4 billion by 2018.
Nearly half of all identity fraud originates online via
large eCommerce merchants.
CONSUMER
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2/3
$16B
Two thirds of consumers impacted by data
breaches fell victim to identity fraud, losing over
$16B in 2014.
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ISSUER SECURITY TRENDS
Overcompensating for fraud in digital environments
perpetuates an imbalance in authorization strategies.
PHYSICAL
0.1%
Fraud
96%
Approval
DIGITAL
$9B
ACTUAL FRAUD
0.5%
Fraud
83%
Approval
$118B
FALSE
DECLINES
U.S. issuers falsely declined $118 B
in transactions in 2014—13X
the amount of actual fraud1
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1. Javelin Advisory Services, Future Proofing Card Authorization: August 2015..
Physical Approval Rate Source/Digital Approval Rate Source: MasterCard Data Warehouse, 2014
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ISSUER SECURITY TRENDS
Once a transaction is mistakenly declined, the impact
can be seen on cardholder usage and spend.
1 in 6
of all U.S. cardholders
experienced at least
one decline because
of suspected fraud
in 20141
32%
stopped shopping with retailer1
GDV falls 11% over 3 months3
25%
decreased their card usage2
4 10
–11%
$101:1
False decline dollars lost for
every #1 in actual fraud4
out of
39% abandoned their card2
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1. Javelin, Overcoming False Positives, September 2015.
2. All declined cardholders. Javelin, Future Proofing Card Authorization, August 2015.
3. MasterCard Advisors, Security Matters, “How Much Does a Declined Transaction Intended to Prevent Fraud Really
Cost?,” 2014. Impact on individual issuer portfolios may vary.
4. MasterCard analysis of issuer portfolio, July–September, 2014. “05” Do not Honor declines only.
©2016 MasterCard. Proprietary and Confidential
ISSUER SECURITY TRENDS
Evolving consumer touchpoints create new points of
payment vulnerability.
THEN
COUNTERFEIT
ADC
LOST & STOLEN
MAGSTRIPE
PIN
BLOCKS
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NOW
FRAUD
CNP
PASSWORD
ALERTS
CVC2
ADDRESS
MONITOR
ID THEFT
ACCOUNT
TAKEOVER
HOW DO YOU AUTHENTICATE THE
ACCOUNT?
CONTACTLESS EMV CHIP
TOKEN
HOW DO YOU VERIFY THE CONSUMER
IDENTITY?
DEVICE GEOLOCATION BIOMETRICS
HOW DO YOU AUTHORIZE THE
TRANSACTION?
PREDICTIVE
ANALYTICS
TXN
DYNAMIC
DECISIONS
RULES
©2016 MasterCard. Proprietary and Confidential
Issuer Security Trends
Our Layered Approach to Security
Transaction Decisioning
Fraud Detection
Fraud Prevention
Large-scale fraud attack
protection
Network-level emergency
fraud blocking rules
Analytics focused
on assessing risk
Fraud rules management
Transaction-level fraud risk
scoring
Event and list management
High-spending cardholder
account segment insights
Consumer account and device
attributes
Integrated decision-based
transaction score
Stand-In Authorization
Expert Monitoring
Authorization IQ
Account Validation
Fraud Rule Manager
Assurance IQ
Safety Net
Auto Billing Updater
Decision Intelligence
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Analytics focused
on fraud exposure,
consumer
experience &
profitability
OUR LAYERED APPROACH TO SECURITY
MasterCard assesses the customer’s security
strength across three interdependent dimensions.
1
SECURING THE
ACCOUNT
ACCOUNT
How strong is your
ability to authenticate
payment accounts?
ACCOUNT AUTHENTICATION
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2
SECURING THE
CONSUMER
3
CONSUMER
TRANSACTION
How strong is your ability
to verify consumers are
who they say they are?
CONSUMER VERIFICATION
SECURING THE
TRANSACTION
How strong is your ability
to analyze transactions to
ensure they are genuine?
TRANSACTION AUTHORIZATION
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OUR LAYERED APPROACH TO SECURITY
We layer security across touchpoints and channels
based on your business needs.
Token-Based
PAN-Based
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Account
Authentication
Account Validation
Account Listings
CVC1 Validation
Automatic Billing Updater
CVC2 Validation
Lost/Stolen List API
Dynamic CVC3 Validation
BIN Table Resource
inControl eCommerce
Negative Listings
EMV
Digitization
M/Chip
Cryptogram
DSRP Dig Secure Remote Pmt
MasterPass Wallet
MDES Tokenization
Physiological
Contextual
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Consumer
Verification
Consumer Data
Passcode
Device
Geolocation
Biometric
Address Validation
PIN Validation
SecureCode
Assurance IQ
Location Alerts
Location IQ
Identity Check
Decisioning
Prevention
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Transaction
Authorization
Fraud Blocking
Fraud Alerts
Fraud Scoring
Fraud Management
Transaction Decisions
Safety Net
Transaction Blocking
inControl Fraud
inControl Card Security
inControl Spend Mgmt
CardAlert Fraud Mgr
Expert Monitoring
Fraud Rule Mgr
Merchant Fraud Dashboard
Advisors AFC Diagnostic
MasterCom Disputes
Decision Intelligence
Authorization IQ
Assurance IQ
Location IQ
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FRAUD MONITORING
Comprehensive transaction fraud monitoring that
addresses fraud across multiple risk dimensions.
Fraud Detection
Models
Fraud Scoring
Fraud Rule
Manager
Event Manager
Fraud Reporter
Precisely Segmented
Fraud Models
Highly Predictive
Fraud Scores
Customizable
Fraud Rules
Easy Management of
Fraud Events
Flexible
Fraud Reports
Segmented DataSpecific Models
developed using
authorization and
fraud data.
Cooperative
Transaction Scoring
based on the
likelihood of fraud
using leading artificial
intelligence.
Create Custom
Business Rules
utilizing authorization
data elements and
MasterCard defined
variables.
Event Manager
full-featured
browser-based
workstation fully
hosted by
MasterCard.
Patented
Behavior Profiles
of your cardholders.
Detect and Score the
Risk of Fraud
and perform
appropriate actions
based on custom
business rules you
define.
Alerts
provided based
on events.
Fraud Operations
Reports
via Fraud Reporter
that provide
information
accumulated from all
MasterCard global
transaction and fraud
data.
Network Models
designed specifically
for your region,
country and product.
Custom Models
trained specifically to
your data.
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Real-Time
fraud scores.
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FRAUD MONITORING
State-of-the-art analytics enable targeted fraud
detection that continually adjusts to new schemes.
The power of 10 modeling technologies applied to MasterCard’s vast transaction and fraud data
yields highly predictive fraud scores.
Expert Monitoring Technologies
Smart Agents
Neural Networks
Generic Algorithm
Neural Networks
Business Rules
Data Mining
Data Mining
Flexible Logic
Optimization
Business Rules
Case-Based Reasoning
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Fraud Scoring Model
Velocity
Text Mining
Velocity
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FRAUD MONITORING
Reduce your fraud-related costs.
Increase your accuracy in fraud detection with
precise fraud models tuned to your unique needs that
leverage comprehensive cardholder transaction history
to address unusual activity.
Lower your false positive rates with highly
predictive fraud scores that reduce investigation of
transactions that appear to be fraudulent but prove
to be legitimate.
Strengthen your customer relationships with fewer
false positives and proactive cardholder alerts of
suspicious activity that lessen customer inconvenience.
Reduce your IT investment in fraud management
with turnkey, scalable transaction fraud monitoring
hosted by MasterCard.
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©2016 MasterCard. Proprietary and Confidential
FRAUD MONITORING
Leveraging smarter transaction decisioning can yield
significant benefits for you and your cardholders.
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HIGHER REVENUES
LOWER EXPENSES
GREATER LOYALTY
WITHOUT INCREASED RISK
FOR OPERATIONS & SERVICE
FROM HIGH-SPENDING CARDHOLDERS
• Smarter authorization criteria to
approve more genuine transactions
for high-spending cardholders
• Fewer declines means opportunities to
reduce operational and customer
service expenses
• More consistently positive consumer
experience—enhances consumer affection
• Fewer false declines, especially on
profitable transactions for highspending cardholders
• Cost-effective complement to existing
fraud prevention tools
• Fewer declined transactions reduces
customer service issues and reinforces
brand loyalty
• Lower capital and IT development costs
from outsourcing segmentation to
MasterCard
• More effective usage and retention
strategies by matching cardholders
to the right products
©2016 MasterCard. Proprietary and Confidential
FRAUD MONITORING
Smarter decisioning beyond fraud to assess the
risk and rewards in every transaction.
Decision Intelligence
 Evaluates multi-dimensional authorization and
cardholder criteria applying sophisticated modeling
algorithms and enhanced data insights not typically
available during authorization.
 Simplifies and integrates insights into a single
transaction decision score delivered to issuers in the
real-time authorization message.
 Helps issuers to fine-tune their authorization decisions in
order to approve more genuine transactions
without increasing risk.
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Consumer
transaction
attributes
Transaction
risk
Cardholder
segmentation
Decision Intelligence
Score
©2016 MasterCard. Proprietary and Confidential