Mastercard has launched its First-Party Trust programme with AI-powered insights. The initiative is designed to combat the surging trend in first-party or ‘friendly’ fraud. Specifically, this occurs where genuine transactions are mistakenly or intentionally challenged by cardholders.
The programme has been developed in collaboration with industry groups including the US Merchant Advisory Group and Merchant Risk Council.
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Mastercard references research that 75% of fraud experienced by digital businesses is first-party fraud. With current global ecommerce levels on the rise, increased safety and transparency of payments for merchants, small business owners and entrepreneurs is a necessity.
For small businesses the benefits of the First-Party Trust program will be particularly valuable. It assists them with previously burdensome time and resource-intensive issues, such as researching and addressing claims. Issuers can more accurately determine what is a third-party fraudulent transaction as opposed to first party fraud. And so they will have more reliable information when discussing disputes with their cardholders.
How It Works
The First-Party Trust programme aims to create greater transaction transparency. It gives merchants, including small businesses, the opportunity to submit pertinent insights to counter first-party fraud. Mastercard will provide two paths for the sharing of these enhanced insights between a merchant and card issuer. Merchants can send the enhanced data directly as part of the transaction. Alternatively, they can do so post transaction as part of the disputes process. The programme will also enhance the resolution of such disputes. It will provide
AI and risk modeling to help identify genuinely fraudulent (third-party fraud) transactions. Moreover, it will signal those that carry the highest levels of trust.
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By GlobalDataThe programme also offers enhanced signals for issuers enabling greater insight into the cardholder’s purchase history, device, delivery information, identity elements, and geographic location. In addition, it incorporates new rules defining compelling evidence to help recognise genuine purchases and prevent unnecessary flawed disputes. This includes merchant chargeback protection for disputes that meet First Party Trust data sharing requirements.
The First-Party Trust programme is a global programme, with the rollout starting with the US in 2024.
AI, identity and dispute resolution technologies to enhance the user experience
“As more of our spending happens digitally, it has never been more important to reduce friction in the transaction process for the benefit of all parties involved. That’s why we are bringing our world-leading AI, identity and dispute resolution technologies to enhance the experience and reduce risk to businesses. Through our technology, banks and merchants can retain trust with their most vital constituents: their customers,” said Ajay Bhalla, President of Cyber and Intelligence at Mastercard.
Linda Kirkpatrick, President, Mastercard, North America, added: “Businesses – big and small – have seen an immense pull forward in digitisation, which is fueling new ways to pay. It’s an imperative that we empower the entire ecosystem with peace of mind, the right tools and technology to combat fraud, while maintaining protections that consumers have come to expect.”
John Drechny, CEO, Merchant Advisory Group, said: “With the First-Party Trust Programme, Mastercard is transforming the dispute experience and streamlining transactions for everyone involved. We’re pleased to see this significant leap forward, reinforcing trust as the bedrock of the relationships between merchants and small businesses, issuers, acquirers, and most importantly, consumers.”
