Today's payments companies face a growing threat as criminals use artificial intelligence (AI) to create increasingly sophisticated scams. Fraudsters now use deepfakes, create fake identities, and run automated phishing attacks to bypass security systems that used to work well. The costs are staggering – fake (or synthetic) identity fraud alone is expected to cause $23 billion in losses across the U.S. by 2030. Looking at overall fraud numbers, 2023 saw reported losses top $10 billion, up 14% from 2022.

As payment ecosystems become more digital and interconnected, there are more weak points for criminals to target. Experts predict payment card fraud will increase by over $10 billion between 2022 and 2028, highlighting why we need security measures that can keep up with new threats.

The role of AI in fraud detection

Banks and payment companies have turned to AI and machine learning to fight fraud, finding these tools much more effective than older rule-based security systems. These technologies look at transaction patterns in real-time, spotting suspicious activities that traditional systems miss, so companies can step in before fraudulent transactions go through.

Industry leaders clearly see the value – research shows that 85% of senior payment professionals view fraud detection and prevention as the main use for AI in payments. This shows how the industry is changing its approach to security in our complex digital payment world.

Key technologies driving AI fraud prevention

Several important tools are now central to modern fraud prevention:

• Machine learning & big data analytics: Sophisticated algorithms look through millions of transactions, spotting fraud patterns while reducing false positives that frustrate regular customers.
• Risk-based authentication & tokenisation: These tools provide strong security without disrupting the customer experience, adjusting security checks based on how risky each transaction seems.
• Real-time transaction monitoring: Modern systems check transactions as they happen, immediately flagging suspicious activities for review before any money is lost.

Strategic AI collaboration: HPS and Enigma

HPS and US-based data science company Enigma have teamed up to bring powerful AI fraud detection to businesses worldwide. This partnership combines Enigma's advanced AI technology with HPS's comprehensive payment platform, creating effective protection that works across payment issuance, acquisition and authorisation workflows.

What makes this approach special is its two-part strategy: cutting-edge AI models that catch new fraud patterns working alongside proven rule-based systems that identify known suspicious behaviours. Together, they provide complete protection against both sophisticated schemes and common fraud tactics.

The partnership brings Enigma's AI models – already trusted by more than half of the top 10 U.S. banks, including major names like Chase Bank, PayPal, and Equifax – to enhance HPS's global payment platform that serves over 95 countries.

The future of AI-powered payment security

Looking ahead, AI will play an even bigger role in protecting payment systems. The ability to adapt to new threats in real-time while accurately telling the difference between legitimate and fraudulent transactions will become essential for financial institutions wanting to protect their customers and assets.

As regulations continue to develop, finding the right balance between innovation and compliance through responsible AI use will remain important. The HPS-Enigma partnership shows how companies working together can make real progress in payment security, setting new standards for the industry.

As fraud tactics keep changing, your security needs to keep up. Contact HPS to learn about our AI-powered fraud solutions and better protect your payment security today.