Mastercard with crypto innovations for combating fraud

Mastercard announced the debut of a new piece of software that helps banks identify and cut off transactions from fraud-prone crypto exchanges. The announcement was first made in an exclusive interview with CNBC, ahead of the product launch. Read the essence of this interview, recapped below.

Called Crypto Secure, the system uses “sophisticated” artificial intelligence algorithms to determine the risk of crime associated with crypto exchanges on the Mastercard payment network. The system relies on data from the blockchain, a public record of crypto transactions, as well as other sources.

The service is powered by CipherTrace, a blockchain security startup Mastercard acquired last year. Based in Menlo Park, California, CipherTrace helps businesses and government agencies investigate illicit transactions involving cryptocurrencies. Its main rivals are New York firm Chainalysis and Elliptic, which is based in London.

Mastercard is launching the service against a backdrop of growing crime in the nascent digital asset market. The amount of crypto entering wallets with known criminal connections surged to a record $14 billion last year, according to data from blockchain analytics firm Chainalysis. And 2022 has seen a spate of high-profile hacks and scams targeting crypto investors.

On the Crypto Secure platform, banks and other card issuers are shown a dashboard with color-coded ratings representing the risk of suspicious activity, with severity of risk ranging from red for “high” to green for “low.”

Crypto Secure doesn’t make a judgment call on whether to turn away a specific crypto merchant. That decision is down to the card issuers themselves.

Mastercard already uses similar technology to prevent fraud in fiat currency transactions. With Crypto Secure, it’s expanding such functionality to bitcoin and other virtual currencies.

Ajay Bhalla, Mastercard’s president of cyber and intelligence business, said the move was about ensuring its partners can “stay compliant with the complex regulatory landscape.”. According to Ajay Bhalla, “The idea is that the kind of trust we provide for digital commerce transactions, we want to be able to provide the same kind of trust to digital asset transactions for consumers, banks and merchants.”

 

 

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