Neural networks have played an important role in the fight against card payment fraud for several decades. Once at the cutting edge of technology, their move into mainstream use in the 1990s was viewed as a near science fiction-like development.

The technology they are based on allows them to learn from past experience – by monitoring legitimate customer spending behaviour and then storing this information as patterns or trends, similar to the behaviour of the human brain. When the functions that it oversees are under attack, the neural network should be able to respond, by being able to recognise abnormal activity on a customer’s account.

With 2013 seeing a further increase in online payment fraud, maintaining consumer confidence in payment products is essential and has become that little bit more challenging. In a world of ever larger transaction volumes, the attraction for criminals is obvious. And with fraudsters often apparently one step ahead of the systems put in place to stop them, it is down to the constant vigilance of the payment industry to monitor the latest fraud threats and take suitable action to protect their customers’ payment data.

One example of this is around the spate of scams involving open loop prepaid cards. These cards, which had originally been thought fraud-proof, in part due to funds on the cards being the responsibility of the customer rather than the card issuer, have been used on a number of occasions to steal millions of dollars in surprisingly short amounts of time.

A recent report suggested that the revenue lost from genuine transactions that were declined because of over-sensitive fraud management technologies amounts to a staggering $40 billion globally per year (http://cardnotpresent.com/news/default.aspx?id=2661).

A statistic that is even more startling when taking into consideration that actual total online fraud losses in 2012 amounted to approximately $4.2 billion (The Nilson Report, issue no. 1023, page 6), around one tenth of the suggested revenue lost from declined transactions.

IRIS Analytics, a leading provider of technology and consultancy services to the payments industry to combat electronic payment fraud, has appointed Constantin von Altrock to the executive board as joint Managing Director alongside Nikolaus D. Bayer and Hanns-Michael Hepp. This appointment will help the company take best advantage of its continuing rapid growth.