Mastercard Escalates the War on Fraud with New Crypto Tools


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Mastercard has announced that they’re continuing to experiment with crypto transactions and will be releasing two new tools later this year. The first, Utility Settlement Coin, allows banks to process cross-border payments faster than ever before without the risk of fraud or chargebacks, while the second tool allows banks to make and receive crypto payments in a simple manner. Mastercard claims that this will help push the world further into the future of commerce by helping businesses accept crypto payments from customers all over the world with ease.

The Mastercard would launch a new piece of software on Tuesday that aids banks in identifying and blocking transactions from fraudulent cryptocurrency exchanges.

The technology, known as Crypto Secure, assesses the risk of criminal activity related to cryptocurrency trades on the Mastercard payment network using “advanced” artificial intelligence algorithms. The system makes use of information from several sources, including the blockchain, a public ledger of cryptocurrency transactions.

CipherTrace, a blockchain security firm that Mastercard purchased last year, powers the service. CipherTrace, a Menlo Park, California-based company, assists organisations and authorities in looking into unauthorised cryptocurrency transactions. Its primary competitors are the New York-based Chainalysis and the London-based Elliptic.

The solution is being introduced by Mastercard against the background of an increase in criminality in the emerging digital asset market. According to statistics from blockchain analytics company Chainalysis, the amount of cryptocurrency entering wallets with known criminal ties increased to a record $14 billion last year. The year 2022 has also witnessed a wave of high-profile cyberattacks and con games that target cryptocurrency investors.

On the Crypto Secure platform, banks and other card issuers are given access to a dashboard with color-coded ratings for the possibility of suspicious behaviour, with red signifying “high” risk and green denoting “low.”
Crypto Secure does not choose which crypto merchants to accept or reject. That decision is left to the card issuers.

Mastercard currently employs a similar system to prevent fraud in transactions using fiat currency. Through Crypto Secure, it is extending these capabilities to bitcoin and other virtual currencies.

Ajay Bhalla, head of Mastercard’s Cyber and Intelligence Business, said the action was taken to assist its partners in “maintaining compliance with the challenging regulatory landscape.”

Before the product launch, he gave CNBC an exclusive interview in which he said that “the entire digital asset market is now a really significant, considerable company.”

The idea is that we want to be able to provide consumers, banks, and merchants the same level of trust in digital asset transactions as we do for digital commerce transactions.

Compliance has lately gained significant significance in the cryptocurrency field as more banks and payment providers enter the market with their own facilities for trading and retaining digital assets. Nasdaq became the most recent renowned financial institution to follow Wall Street’s embrace of cryptocurrencies this month by launching custody services for institutional clients.

The Bitcoin business has so far mostly eluded regulation, but governments on both sides of the Atlantic are seeking to adopt new limitations. The Biden administration unveiled its first-ever framework for regulating the cryptocurrency sector in the United States last month, while the European Union established ground-breaking crypto legislation of its own.

At a time when cryptocurrency prices are dropping and trading volume is dwindling, the biggest payments business in the world is increasing its investment in the technology. The market as a whole has lost around $2 trillion in value since November 2021, when it reached the peak of a major increase.

One bitcoin is now worth less than $20,000 after reaching an all-time high of around $69,000, and it has proven challenging to go much higher in recent weeks.

When asked how the declines in cryptocurrency prices had influenced Mastercard’s digital asset strategy, Bhalla replied that the company was “focused on delivering solutions to the stakeholders for the long run.”

He said, “These are market cycles, and they come and go.” The author stated, “I think you’ve got to look at things in the longer term because this is a huge company right now, it’s evolving, and it’s definitely going to grow much, much bigger in the future.”

The level of crime in the industry has not changed despite the drop in the value of digital tokens. This year, it has been very common to steal money from cryptocurrency investors by using blockchain bridges, which are tools used to transfer assets from one crypto network to another. According to Chainalysis figures, breaches on these cross-chain bridges have cost about $1.4 billion since the year 2022 began.

In light of this, major financial services providers and cryptocurrency platforms are investing in order to decrease the likelihood that illegal revenues would be transferred via their systems. Cryptocurrencies are occasionally criticised for their use in money laundering and other criminal acts, in part because users on blockchain networks often utilise pseudonyms.

However, the development of new technological tools has made it easier to track down stolen bitcoin. Businesses are utilising cutting-edge data science and machine learning tools to analyse data on open blockchains.

Mastercard is attempting to keep up with Visa in order to compete with it. Visa has contributed significantly to the bitcoin business. During the first fiscal quarter of 2022, according to a study from Visa, the business permitted $2.5 billion in transactions using cards linked to accounts at cryptocurrency exchanges.

In order to assist clients with anything from integrating bitcoin functionality to researching non-fungible assets, Visa launched a crypto advisory branch last year.

The overall dollar volume of fiat-to-crypto transactions from the 2,400 crypto exchanges on the Mastercard network was not made public. However, the titan of the credit card business, according to Bhalla, now processes “thousands” of transactions per minute.


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