Prevention is a better than remedy when it comes to fraud and scams. Globally, criminals are using AI and operating like large businesses to commit financial crime in increasingly sophisticated and coordinated attack strategies. So, protecting the integrity of financial systems requires continuous investment in cutting-edge fraud prevention technologies.

The rise of fraud and new tactics for cybercriminals

In New Zealand alone, fraud has become the most prevalent and fastest-growing crime, accounting for approximately 29% of all offenses[1]. But this is a global problem, and to stay ahead will require ongoing innovation and investment from various parts of the ecosystem to tackle the problem. Globally, Visa has invested USD$11 billion over the past five years in cutting-edge technology to combat fraud, such as artificial intelligence (AI)[2]. And in a single year, we helped financial institutions prevent NZD$273 million in fraud from disrupting the nation’s businesses[3]. There’s more to be done.

While the rise of generative AI, machine learning, and the rapid expansion of eCommerce have created new vulnerabilities for cybercriminals to exploit, fraudsters are targeting the most critical weak point in the payments ecosystem: humans. Integrating machine learning with human-centric security measures, such as biometric verification, contextual risk assessment, and proactive scam prevention strategies, the financial sector can stay ahead of emerging threats.

The invisible nature of prevention means a consumer or small business owner might not even realise they had been the target of an attack, and it’s only when they are personally affected by fraud or scams that they are alerted to the realistic capabilities and potential scale.

Fraud in real time

Digital wallets, peer-to-peer payment platforms, and embedded payment solutions are growing in popularity. These choices can enhance convenience, but they also introduce new vulnerabilities by increasing the number of touchpoints within the system for malicious actors. Notably, fraud is shifting away from traditional card transactions toward account-to-account (A2A), where real-time (or near-real time) payments enable fraudsters to access funds instantly, and making recovery more challenging.

To thrive, companies must embrace emerging trends in data analytics and AI, making strategic investments while equipping their workforce with the skills needed to leverage these tools effectively. This dual focus on technology and talent will be key to driving sustainable growth in an increasingly interconnected world.

Visa continues to work with industry to minimise the impact of fraud and leverage its knowledge and experience in fraud prevention for card transactions and apply it to A2A payments. By leveraging advanced machine learning algorithms, Visa’s AI systems are capable of analysing vast amounts of transaction data in real time. These systems detect anomalies and subtle patterns that may indicate fraudulent activity, allowing financial institutions to respond swiftly and effectively. This helps financial institutions detect and prevent fraudulent activities before they can cause significant harm, keeping funds protected, and minimising recovery efforts.

The way forward

As the digital landscape continues to evolve, it’s crucial to recognise that fraud prevention is an ongoing effort rather than a one-time solution. While the integration of AI and machine learning offers powerful tools for real-time fraud detection and prevention, the human element remains. Continuous education for both consumers and businesses, along with a proactive approach to cybersecurity ensures that fraud is not only addressed reactively but also prevented before it occurs.

Its also important to note that fraud impacts the entire economy. By fostering collaboration among technology providers, financial institutions, and regulatory bodies, a more secure and transparent payments ecosystem can be created; one that benefits everyone. The fight against fraud demands both innovation and vigilance, and with a collective effort, the financial industry can build a safer, more resilient future.

[1] https://sfo.govt.nz/media-cases/media-releases/fraud-flourishes-when-financial-strain-and-workforce-disruption-meet-tech-driven-opportunities

[2] Visa Helps Holiday Shoppers Stay Secure, Blocking Nearly 85% More Suspected Fraud Globally This Cyber Monday Compared to Last Year¹ | Visa

[3] Visa prevents more than $270 million in fraud from disrupting New Zealand businesses | Visa