AI Helps Merchants Mitigate Card Fraud That Affected 62 Million Americans in 2024

In 2024, some 62 million Americans experienced credit or debit card fraud. And unauthorized purchases made with fraudulently obtained card data topped $6.2 billion, according to a recent study from Security.org.

Credit card fraud isn’t new, but the tactics criminals use to access cardholder information has changed over time. Unauthorized remote access of payment information and illegally installed skimming devices that capture card numbers allow scammers to commit fraud from nearly anywhere in the world. 

In fact, only 8% of card fraud committed in 2024 was the result of a lost or stolen card. The remaining 92% of card fraud occurred remotely, with cardholders still in possession of their physical cards.

Corie Colliton is a Senior Editor of Industry Research with Centerfield, the parent company of Security.org. Colliton told us that Security.org has conducted this study three times previously, and the company interviewed approximately 1,000 adults in the U.S. to gather data for this year’s report. 

A cardholder’s buying behaviors can increase the likelihood that criminals acquire their card data. With the majority of card fraud occurring remotely, cardholders must be aware of how their online shopping practices can encourage fraud, Colliton told us.

“If your browser or some of your online accounts are compromised, your credit card info is just going to be sitting there,” Colliton said. “Consumers who use a public wifi connection or a free VPN, which is a little riskier than a paid VPN, are making their transactions riskier. Using the same password for more than one account and storing credit card info in your browser or on a website can also be risky.”

Cardholders may not be aware of how their online purchasing patterns and lack of security protocols can serve as an invitation for criminals to access their card information.

But the stakeholders on the other side of purchases — including merchants and credit card networks — can take steps to fortify the security of transactions conducted with a credit or debit card.

Visa and Mastercard are the largest credit card networks in the world. Combined, the two networks have nearly 2.4 billion credit cards in circulation, representing 69% of all credit cards in circulation worldwide. The two companies have both recently announced innovations that will bring convenience and enhanced security to card transactions.

Visa has announced its entry into the account-to-account (A2A) payment arena. The company’s introductory A2A offering is rolling out in the U.K. later this year. Payments made via A2A services aren’t fraud-proof, but they leave third parties out of the transaction settlement process. Removing the intermediary from the process eliminates one of the sources criminals can attempt to steal payment data from. 

And Mastercard has announced plans to issue numberless cards by 2030. Numberless cards will rely on tokenization to complete transactions and will not store a card’s numbers on systems that are vulnerable to hackers.  

Payments processor Worldpay, which processes approximately 2.3 trillion transactions per year, is employing artificial intelligence (AI) to combat fraud. Worldpay’s Senior Product Leader, Sunny Thakkar, said in a recent interview that machine learning — a component of AI that can make decisions based on provided information — has the potential to make a significant impact on reducing fraud when it uses as much quality data as possible.

All of these measures aim to help reduce card fraud, but credit card issuers and merchants can also take steps to thwart fraudulent attacks. John Hutton, Global Head of Payments at LexisNexis Risk Solutions, told us that merchants and card issuers should consider implementing a multifaceted fraud prevention strategy.

“Card fraud prevention is an evolving space where bad actors continuously try to find weaknesses in the card payment process,” Hutton told us. “Card-present and card-not-present processing require different types of fraud-mitigating tools and techniques. Also, merchants and issuers will most likely need layers of protection rather than just one solution.”

Merchants don’t have to wait for card network innovations to bolster their strategies for preventing card fraud in 2025. Though it’s not an all-inclusive, the list below comprises security measures that protect payment data.

• Fraud Protection Alerts: Merchants can enable real-time alerts to quickly identify fraudulent card transactions. Businesses can tailor alerts to suit the nature of their customers’ payments activity, directing fraud tools to notify them when transactions exceed certain amounts or originate from a suspicious location.
• Secure Payment Terminals: Payment terminals come in many shapes and sizes. Merchants should choose the terminal option that best fits their business while ensuring it complies with Payment Card Industry Data Security Standards (PCI DSS).
• Multi-layered Authentication Methods: It’s imperative that businesses confirm the identity of customers initiating card-not-present transactions. Hutton told us that multi-layered authentication methods, including voice and facial biometrics, will play a significant role in countering deepfake technology in coming years.
• Monitor Transactions: The more familiar a merchant is with customer payment habits, the more they’ll be prepared to notice suspicious purchase activity. Merchants should review transactions regularly to spot signs of potential payment fraud.
• Leverage Emerging Technologies: Tools that harness the power of AI and machine learning can be instrumental in preventing card fraud. Merchants should stay informed of emerging developments in AI-powered fraud prevention platforms to keep bad actors at bay.

The schemes criminals use to penetrate firewalls and steal payment information evolves as companies develop new defenses. Merchants who are nimble and pivot to advanced security techniques can position themselves to fend off hackers.

“Speed and accuracy will be key in preventing fraud, and AI will be used increasingly to monitor behavior and transactions and identify customer spending anomalies in real-time,” Hutton told us. “Implementing advanced AI models should be part of any new fraud prevention strategy.”