Page 29 - GS241201

Insights and Expertise

Getting it I know how they move the money

Herein lies the issue. Acquirers and merchants need
right every data from issuers to hone their transaction monitoring,
and issuers need transactional data to ferret out money
time laundering. That’s why even though we are in an arms
race and Visa and Mastercard have the largest war chest,
they will need to continue to buy companies and solutions.
By Ken Musante Individually, companies will not be able to keep up.
Napa Payments and Consulting Fraudsters and their schemes are too dynamic and the
datasets too large. Even the largest companies will have
I is fantastic! The use cases are endless, and competing road maps that will prevent them from staying
therein lies the problem. Fraudsters appreciate at the fore.
the ease it allows them to infect the internet
A and steal data. Cybercriminals are able to mul- Visa and Mastercard understand this and will continually
tiply their subterfuge exponentially. Every week, there's a buy tools to avail to their clients. Like most card brand
new way to falsify documents or create a fake back story. solutions, however, they will be good but watered down
and blind to corner cases. I expect the next and greatest
Consequently, the good guys need to up their arsenal, to emanate from smaller companies, building on existing
fortify every transaction and identify the bad actors and infrastructure.
threats—all in real time while minimizing false positives.
Banks and processors must upgrade outdated technol- Outsmarting the fraudsters
ogy with AI-driven solutions built on modern technology
stacks. Some former associates from my WePay days started
Coris, a risk scoring and fraud platform designed to assist
We need not look far for justification. This year alone, ma- fintechs and payfacs evaluate and monitor merchants.
jor data breaches occurred at AT&T, Ticketmaster, Change While Coris is a fraction of the size of Visa and Mastercard,
Healthcare and, ironically, at online background check it is the type of firm that will engineer the solution. It
and fraud prevention service National Public Data. will do this by utilizing the anonymized data from both
publicly available databases and proprietary data sources.
We are dealing with science here The Coris team will know the data better because they
were operators. They will build AI driven models to
AI’s ability to train and learn has helped reduce false posi- surpass the fraudsters.
tives while throttling the onslaught of fraud attacks. Visa
and Mastercard are in an arms race with fraudsters, and Other competitors like Middesk, Signifyd, Sardine,
they have the war chest to fund it. Both card networks Agreement Express and BankIQ have developed their
made recent acquisitions in the space. Visa stated it will own solutions. Each will pursue a solution set and strive to
acquire Featurespace, a developer of real-time artificial in- increase the value of their dataset and efficiently serve it to
telligence payments protection technology that prevents their clients. When I was a child, my grandfather stopped
and mitigates payments fraud and AML risks. Visa ex- a purse snatcher in San Francisco. He yelled, "Freeze or I’ll
pects the acquisition will complement and strengthen its blow your brains out!’" He didn’t have a gun, but his bluff
portfolio of fraud detection and risk-scoring solutions. was successful in subduing the perpetrator.

Mastercard, in turn, expanded its cybersecurity services Unfortunately, we are past the days when perpetrators
with an agreement to acquire Recorded Future. Recorded run away from the crime scene. Today they disguise
Future provides real-time visibility into potential threats themselves to look like every other customer, and we are
by analyzing multiple data sources. The acquisition ex- reliant on multiple data points from a multitude of data
pands Mastercard’s existing collaboration with Recorded sets, trained by risk operators to thwart fraud while not
Future on an artificial intelligence service that alerts banks inconveniencing the rest of us.
when a credit or debit card has likely been compromised.

The card networks need to solve both the merchant-side As founder of Humboldt Merchant Services, co-founder of Eureka
payment transaction fraud and issuer-side account take- Payments, and a former executive for such payments innovators as
over and fraudulent application. They both must also WePay, a division of JPMorgan Chase, Ken Musante has experience in
eliminate money laundering through transaction moni- all aspects of successful ISO building. He currently provides consulting
toring. Ideally, the data will be harnessed from one side services and expert witness testimony as founder of Napa Payments
to train the models on the other. A risk based, machine and Consulting, www.napapaymentsandconsulting.com. Contact him
learning rules engine is only as good as the data the model at kenm@napapaymentsandconsulting.com, 707-601-7656 or www.
is digesting. linkedin.com/in/ken-musante-us.

29