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Machine Learning: The Future of eCommerce Fraud Prevention

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Machine learning plays a pivotal role in effective fraud prevention systems. In this article, learn how machine learning can significantly improve your business’ ability to stop fraud attacks.

With the recent surge in e-commerce usage globally, the possibility of an online fraud attack is at an all-time high. e-commerce retailers stand to lose over US$20 billion in 2021 due to online fraudulent attacks.

This would represent an 18% increase in fraud losses compared to the US$17.5 billion recorded in 2020.

Customers want to have the assurance that they can purchase products without experiencing a false decline, and merchants want to feel that they can trust the legitimacy of new incoming transactions.

This is where machine learning comes into play.

In this article, we’ll take a close look at the world of machine learning as it pertains to e-commerce fraud prevention.

By the end, you should understand the benefits of using a fraud solution that leverages machine learning, and why this technology is essential to effectively stopping e-commerce fraud attacks.

What is Machine Learning?

It has been ten years since IBM’s Watson computer won Jeopardy on national television against two human opponents. It was able to do this through a set of functions that had enabled it to learn the rules of the English language.

Through these rules, it made connections between words and could work out the Jeopardy question from the answer given by the host.

This is only one example of how machine learning technology works, but it can extend to a variety of different use cases.

Machine learning is a branch of artificial intelligence (AI) that focuses on using data and algorithms to imitate the way a human would learn.

Machine learning enables fraud prevention systems to gradually improve how they identity and stop fraudulent transactions without the use of manual review.

Machine Learning in eCommerce Fraud Prevention

Similar to how the Watson computer used machine learning on Jeopardy to learn the English language, fraud solutions like Vesta Payment Guarantee use this technology to learn the patterns and behaviours associated with legitimate and fraudulent transactions.

By investigating all of the variables and pieces of data associated with an approved or declined transaction, a fraud solution can fine-tune its decisioning engine so there’s a smaller margin of error.

Here are the three key benefits to using machine learning to stop fraud attacks from impacting your e-commerce business:

1. No Impediment to the Customer Journey

If you rely on manual transaction review to identify and stop fraud, it’s likely that you deal with a high volume of false declines.

Consumers that have orders declined due to suspected fraudulent activity will almost never return to buy from that retailer, so it’s important that you work to minimise false declines as much as possible.

Machine learning enables fraud prevention solutions to accurately determine the legitimacy of a transaction without causing any unnecessary friction during the checkout process.

False declines can be significantly reduced, resulting in a smoother customer journey and quicker checkout experience.

2. Reduced Operational Costs

Machine learning can effectively eliminate the need for manual transaction review.

If you currently use a team of fraud analysts to review suspicious transactions, it might be time to consider investing in a fraud prevention solution that will perform that job quicker and more accurately.

Don’t let operational costs associated with fraud cut into your bottom line. Using a fraud solution that leverages machine learning will significantly reduce your operational costs, and eliminate the possibility of human error.

3. Drastically Reduce False Declines

Machine learning has benefits besides determining when there is a fraudulent transaction. Fraud prevention technology is also better at identifying real purchases too.

This prevents customers who have done nothing wrong from hearing they cannot make purchases. Thus your customer’s faith in your ability to detect eCommerce fraud will not diminish and their time will not be wasted.

First appeared on Vesta’s Blog on eCommerce Fraud.

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Source: https://fintechnews.sg/55527/e-commerce-fraud-blog/machine-learning-the-future-of-ecommerce-fraud-prevention/

Fintech

Truist sees significant growth across digital assets in Q3

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Truist saw significant increases across its digital portfolio in the third quarter with 58% growth in Zelle use over the same time last year. The Charlotte, N.C.-based bank also completed a major phase of a core conversion from legacy systems to Truist’s own core. Technology was a key talking point for Chief Executive Officer Bill […]

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Source: https://bankautomationnews.com/allposts/core-cloud/truist-sees-significant-growth-across-digital-assets-in-q3/

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Fintech

Deals and dollars: Banks look to cloud tech, fintech funding on the rise

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Banks this week announced deals to implement cloud-based services and core systems to unify and streamline services; meanwhile, investments in fintechs, including embedded payment systems providers, continue to spike. Frost Bank & Blend San Antonio-based Frost Bank is expanding its relationship with cloud banking process automation software provider Blend, whose list of some 300 customers […]

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Source: https://bankautomationnews.com/allposts/core-cloud/deals-and-dollars-banks-look-to-cloud-tech-fintech-funding-on-the-rise/

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Citi develops embedded finance services, adds 80 partner APIs

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Citigroup’s digital strategy and focus on future partnerships led to a rise in technology spend in the third quarter. Citi’s technology and communications spend was up 6% in the third quarter to nearly $2 billion year over year. The $2.2 trillion bank discussed technology-related initiatives during its Thursday earnings call, including future partnerships and digital […]

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Source: https://bankautomationnews.com/allposts/retail/citi-develops-embedded-finance-services-adds-80-partner-apis/

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Bitcoin makes run toward record high amid ETF exuberance

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Bitcoin-to-the-moon traders are back with a vengeance as the cryptocurrency approaches its all-time high and demand jumps for bullish contracts across crypto exchanges.

The world’s largest digital token surged about 7.4% to $61,711 on Friday — taking this month’s rally to over 40% — after Bloomberg News reported the U.S. Securities and Exchange Commission looks poised to allow the country’s first futures-based cryptocurrency ETF.

As institutional and retail demand grows for the more than $1 trillion asset, speculators are eying a return to April’s $64,869 record peak while premiums are rising for derivatives betting on higher prices.

“The U.S. was always the big prize and signals further regulatory validation and acceptance of cryptocurrencies,” said Antoni Trenchev, co-founder of crypto lender Nexo. “Momentum is clearly with Bitcoin right now and it’s only a matter of time before the April high is taken out.”

All month long, speculation of imminent ETF approval has driven up Bitcoin, helping it outperform smaller tokens to reclaim 46% of the crypto ecosystem’s total market value. An exchange-traded fund is expected to draw more interest from investors that prefer buying a familiar, regulated product over navigating digital-currency exchanges.

In a sign of rising animal spirits, the seven-day average funding rate on Bitcoin futures — the cost of keeping a bullish bet open — rose to 5% on the Binance platform. That compares with just 1.9% at the end of September in Bybt data compiled by The Block, a crypto information service. On FTX, another popular exchange, the premium over the past 24 hours has shot up to 23% from 7.6% over the past month.

The value of outstanding futures on crypto exchanges rebounded to $21.5 billion, compared with the $27 billion peak earlier this year, according to Bybt.

Similarly, the curve has steepened in CME futures, indicating an increasingly optimistic outlook for Bitcoin’s trajectory. The gap between December contracts and this month’s widened to 990 basis points, the most since April.

Ki Young Ju, chief executive officer at analytics firm CryptoQuant, said on Twitter prices have been driven by whales buying large amounts of the cryptocurrency through derivatives.

It all marks a shift from recent months, when Bitcoin bulls were left subdued after the May crash and attention turned to a host of other speculative manias like non-fungible tokens.

“With a well integrated ETF structure, crypto is poised to go mainstream,” said Peter Rosenstreich, head of market strategy at Swissquote Bank. “This could push Bitcoin to the $60,000 handle due to expectation for broader investment adoption.”

— By Justina Lee with assistance from Anchalee Worrachate and Joanna Ossinger

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Source: https://bankautomationnews.com/allposts/crypto-defi/bitcoin-makes-run-toward-record-high-amid-etf-exuberance/

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