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Mastercard (MA) Utilizes AI to Bolster Fraud Detection Skills

Mastercard Incorporated MA introduced a technology advancement in a bid to offer a higher degree of protection for cardholders and assure greater security within the digital payment ecosystem. The new advancement has been built through the utilization of innovative generative AI techniques.

While digitization has been a blessing due to its ease and convenience, the trend to go digital often encourages fraudsters to devise sophisticated methods and technologies to indulge in cybercrimes. Fraudsters make use of spyware, malware and other illegal methods to obtain payment card credentials and sell parts of the 16-digit card numbers on illegal websites. There remains an alarming concern as such attempts compromise payments received by organizations and the confidential data of consumers, and lead to the incurrence of exorbitant costs.

The recent move endows Mastercard with the capability to examine transaction data across its vast network of cards and merchants significantly faster than before and secure complete details of any compromised card on its payment network. After this, the card can be blocked and reissued, and hence, transaction attempts on the compromised card can be tracked to counter fraudulent activities. This, in turn, will offer peace of mind to consumers engaging in digital payments.

Initiatives similar to the latest one will equip Mastercard to stay aware of new and intricate fraud patterns, and thereby, shield future transactions by doubling the rate of detection of compromised cards. In addition to this, the speed at which MA can detect merchants, who are at risk from fraudsters or have already been compromised, will shoot up by 300%.

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The recent move bears testament to Mastercard’s sincere efforts to enhance its suite of security solutions. Therefore, companies that are similar to Mastercard and provide a comprehensive portfolio of fraud detection solutions with high accuracy for varied industries will be best positioned to capitalize on the increasing incidence of cybersecurity threats. Increased usage of such solutions is expected to fetch higher value-added services and solutions net revenues to the company. The tech giant resorts to partnerships and significant investments for upgrading its cybersecurity suite.

MA also earns revenues from its payment network. Recently, Virgin Red has announced a multi-year deal with Mastercard and Synchrony Financial SYF to introduce the new Virgin Red Rewards World Elite Mastercard credit card program. Synchrony will be the exclusive U.S. issuer of this multi-category travel credit card for Virgin Red while Mastercard will play the role of the exclusive payments network for the card. Increased usage of the card, expected to launch in the second half of 2024, may boost the net revenues of the tech giant from its payment network by charging fees to customers based on the gross dollar volume of activity on the cards.

Shares of Mastercard have gained 23.9% in the past year compared with the industry’s 20.3% growth. MA currently carries a Zacks Rank #3 (Hold).

 

Zacks Investment Research
Zacks Investment Research


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Stocks to Consider

Some better-ranked stocks in the Business Services space are Aptiv PLC APTV and Omnicom Group Inc. OMC. Aptiv sports a Zacks Rank #1 (Strong Buy) and Omnicom carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The bottom line of Aptiv outpaced estimates in each of the last four quarters, the average surprise being 12.18%. The Zacks Consensus Estimate for APTV’s 2024 earnings suggests an improvement of 23.7% from the year-ago reported figure. The consensus mark for revenues suggests growth of 5.2% from the year-ago reported number. The consensus mark for APTV’s 2024 earnings has moved 6.7% north in the past 30 days.

Omnicom’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 3.21%. The Zacks Consensus Estimate for OMC’s 2024 earnings suggests an improvement of 5.8% from the year-ago reported figure. The same for revenues suggests growth of 6.2% from the year-ago reported number. The consensus mark for OMC’s 2024 earnings has moved 0.4% north in the past 30 days.

Shares of Omnicom have gained 4% in the past year. However, the Aptiv stock has declined 10.3% in the same time frame.

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Mastercard Incorporated (MA) : Free Stock Analysis Report

Omnicom Group Inc. (OMC) : Free Stock Analysis Report

Synchrony Financial (SYF) : Free Stock Analysis Report

Aptiv PLC (APTV) : Free Stock Analysis Report

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Zacks Investment Research