RIYADH: Machine learning algorithms could enhance credit card fraud detection by over 94 percent, according to a new study by the Arab Monetary Fund.
According to the report, artificial intelligence plays a crucial role in strengthening credit card fraud detection, and machine learning predicts fraudulent transactions to a large extent.
Global credit card losses due to credit card fraud incurred by financial institutions and individuals hit $32.3 billion in 2021, representing a substantial rise of 13.8 percent compared to the previous year.
AMF, in its report, also urged intensified innovation and collaboration with top financial technology firms to develop ML-based fraud detection systems.
It also highlighted the vitality of using AI and ML to analyze credit card fraud in Arab nations.
The situation is also getting more challenging because of the increasing credit card penetration in the region.
Saudi card payments
In May, London-based data and analytics firm GlobalData reported that Saudi Arabia’s card payments market is expected to grow by 14.6 percent to reach SR532.1 billion ($141.9 billion) in 2023, driven by contactless payments and the government’s push for an digitized society.
The study found that card payment value in the Kingdom registered an annual growth of 29.8 percent in 2021 and 17.3 percent in 2022 thanks to improving economic conditions and a rise in consumer spending.
“While cash has traditionally been the preferred payment method in Saudi Arabia, its usage is on the decline in line with the rising consumer preference for electronic payments,” said Ravi Sharma, lead banking and payments analyst, GlobalData, in a statement released in May.
Stringent regulations
The increasing utility has also spurred a rise in government regulations to prevent financial fraud across the region.
In July, Dubai Public Prosecution announced a clampdown on those forging, counterfeiting or reproducing debit and credit cards and warned that action from fraudsters will result in imprisonment and fines which range from 500,000 dirhams ($136,127) to 2 million dirhams.
“Forging or counterfeiting or reproducing a credit card or debit card or any other electronic payment method by using any information technology means or computer program shall expose to imprisonment and fine not less than 500,000 dirhams and not over 2 million dirhams or either of these two penalties,” said Dubai Public Prosecution.
Earlier this year, Saudi Arabia also announced a $1.3 million fine and five-year jail time for forgery for anyone who forges any electronic signature, records, or digital certificate or uses these documents while knowing they are fake.
