Visa successfully prevented 80 million fraudulent transactions valued at $40 billion globally in the past year, thanks to its significant investments in artificial intelligence (AI). Charles Lobo, Visa's regional risk officer for Eastern Europe, the Middle East and Africa, shared these figures in an interview with Reuters at a conference in South Africa. Over the last five years, Visa has invested more than $10 billion in various technologies, including $500 million specifically in AI and data infrastructure, to protect clients from fraud.
As cybercrime is projected to reach $10.5 trillion globally by 2025, the importance of such technological advancements is clear. The federal government has also employed AI to combat financial fraud, particularly in mitigating check fraud, which has risen by 385 percent since the pandemic. The Consumer Financial Protection Bureau (CFPB) reported that nearly half of acquirers are currently using AI for fraud detection.
The CFPB criticized payment processors for charging high transaction fees on parents who pre-fund their children's school lunches, labeling them as "junk fees." The CFPB's report, Costs of electronic payments in K-12 schools, revealed that parents pay an average of 4.4 percent per transaction to load funds onto school lunch accounts, with some low-income families paying as much as 60 cents for every dollar spent.
These fees add up, with school lunch payment processors collecting over $100 million annually, and despite regulations requiring fee-free options, many school districts do not provide meaningful alternatives, the bureau noted. The report singled out three major players in the market: MySchoolBucks, SchoolCafe, and Linq Connect. The CFPB, which has regulatory authority over payment processors, has previously targeted companies like ACTIVE Network and BrightSpeed Solutions for similar practices. The CFPB's findings underscore the need for more oversight as digital payment options expand in schools.
A recent study by Discover Financial Services’ PULSE debit network shows a significant increase in the use of debit cards among Americans, with 80.5 percent of demand deposit accounts linked to debit cards. Of these, 66.3 percent are actively used, averaging 34.6 transactions per month in 2023, including POS purchases, account transfers and ATM withdrawals.
The average debit transaction ticket was $46.89, contributing to an annual spend of $17,274 per card, up 8.1 percent from 2018 to 2023. Debit cards are not just popular at physical stores; 32 percent of users prefer them for online purchases, with card-not-present transactions making up 36 percent of debit activity. Mobile wallet use is also growing, with 38 percent of debit cards loaded onto mobile wallets, averaging three transactions per month per card. The study highlights the growing importance of debit cards, though potential market shifts could influence future trends.
The peer-to-peer payment network Zelle is under scrutiny, with Senator Richard Blumenthal urging the CFPB to investigate the dispute resolution practices of Early Warning Services (EWS), which operates Zelle, and three major banks that own EWS—Bank of America, JPMorgan Chase, and Wells Fargo. These banks account for 73 percent of all Zelle transactions. The call for investigation follows a Senate subcommittee report that criticized the banks for their handling of scams and fraud affecting Zelle users. Despite claims from the banks and EWS that less than a tenth of a percent of transactions are fraudulent, consumer advocates argue that the current system leaves victims inadequately protected.
The subcommittee's hearings, coupled with a previous New York Times report on Zelle-related scams, have heightened concerns about the transparency and fairness of the banks' dispute resolution processes. Blumenthal asked the CFPB to ensure these banks comply fully with the Electronic Funds Transfer Act and to consider strong enforcement actions if violations are found. 
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