- Mastercard, in a recent announcement to CNBC, revealed its collaboration with Feedzai, a governmental technology platform, to bolster surveillance and combat cryptocurrency fraud effectively.
- Through this partnership, Feedzai will integrate with Mastercard’s CipherTrace Armada software, enabling banks to detect fraudulent activities across more than 6,000 cryptocurrency exchanges.
- This strategic move underscores Mastercard’s intensified focus on eliminating fraud and illicit schemes within the cryptocurrency realm.
Mastercard is ramping up its efforts to identify and prevent fraudulent activities channeled through cryptocurrency exchanges.
The company disclosed its partnership with Feedzai, a governmental technology platform leveraging artificial intelligence to combat online financial fraud and money laundering, to CNBC.
Under this collaboration, Feedzai will seamlessly integrate with Mastercard’s CipherTrace Armada system, empowering banks to monitor transactions from over 6,000 crypto exchanges for signs of fraud, money laundering, and other suspicious behaviors.
Unlike traditional API access, CipherTrace Armada will directly merge with Feedzai’s technology, allowing seamless data ingestion to facilitate real-time alerts on questionable crypto transactions.
Nuno Sebastio, CEO and co-founder of Feedzai, emphasized that this alliance not only enhances fraud detection to safeguard unsuspecting consumers but also identifies potential money laundering activities and fraudulent accounts, such as “horse accounts” utilized by scammers to obscure their illicit funds.
According to Feedzai’s insights, 40% of fraudulent transactions today originate from bank accounts and flow directly into cryptocurrencies.
Furthermore, through this collaboration, Mastercard gains access to Feedzai’s advanced artificial intelligence capabilities. Feedzai’s software can swiftly identify suspicious transactions within nanoseconds while distinguishing genuine ones.
Feedzai’s RiskOps platform scrutinizes transactions exceeding $1.7 trillion annually, showcasing the company’s commitment to innovation and security with over 100 patents and an average acquisition rate of 10 patents per year, with headquarters in Coimbra, Portugal, and San Mateo, California.
Sebastio highlighted a common misconception among banks, noting that many inadvertently block transactions involving legitimate entities in the bitcoin space while overlooking illicit activities.
Rising Popularity of Cryptocurrency
Mastercard’s endorsement of cryptocurrency as a mainstream financial asset subject to standard regulations signals its foray into the crypto market.
As businesses and major financial institutions explore integrating cryptocurrencies into their offerings, challenges persist in incorporating bitcoin products seamlessly due to regulatory uncertainties surrounding fraud prevention.
Last year witnessed a 79% global surge in crypto-related losses due to theft and scams, with illicit addresses receiving a staggering $14 billion, nearly double the amount from 2020, as reported by blockchain analysis firm Chainalysis.
Mastercard’s extensive network empowers banking institutions worldwide to engage in payment processing, positioning it in competition with industry peers like Visa, known for supporting card payments and fintech services.
Despite the growing interest in cryptocurrencies, top UK banks such as JPMorgan, NatWest, and HSBC have imposed restrictions on crypto transactions, citing fraud concerns and prompting criticism from Coinbase CEO Brian Armstrong regarding the UK’s ambition to become a leading “Web3” hub.
Ajay Bhalla, Mastercard’s cyber and intelligence options chairman, highlighted the dual nature of digital finance’s increasing prominence, emphasizing the need for enhanced security measures.
Through the partnership with Feedzai, financial institutions can differentiate between legitimate and fraudulent transactions effectively, with data revealing a fivefold increase in fraud associated with bitcoin transactions compared to stablecoins transactions.
This collaboration builds upon Mastercard’s acquisition of CipherTrace, a US-based cryptocurrency research firm, leading to the launch of CryptoSecure in 2022 to combat fraudulent transactions originating from vulnerable cryptocurrency exchanges.
