Mastercard launches AI-driven merchant scam detection tools

By Parth Prabhudesai

Mastercard has launched new merchant fraud prevention tools aimed at helping banks and payment providers identify scam merchants earlier, as online fraud becomes increasingly sophisticated through the use of generative AI.

The new service, called Merchant Trust Services, combines Mastercard’s network intelligence, cyber and identity capabilities, and real-time analytics to assess merchant risk during onboarding and ongoing transaction monitoring.

The launch comes amid rising concerns over fake online storefronts, with scammers increasingly using artificial intelligence to generate convincing websites, advertisements, customer reviews and testimonials.

According to the Global Anti-Scam Alliance’s Global State of Scams 2025 report, consumers globally lost an estimated US$442 billion to online scams in 2025.

As part of the rollout, Mastercard is also introducing the Merchant Scam & Risk Indicator, which provides issuers with real-time merchant risk signals during payment authorisation.

The company said a pilot programme with a leading issuer showed the indicator identified around 80% of risky merchants detected by the bank, with some merchants flagged as much as 90 days before the issuer’s first escalation.

The risk indicator will initially launch in Europe and the United States before expanding globally later this year.

Mastercard is also updating its franchise standards from July, requiring acquirers and payment facilitators to investigate potential scam activity within 72 hours once a defined risk threshold is reached. If fraud activity is confirmed, the merchant must be blocked from accepting Mastercard transactions.

Ann Johnson, Executive Vice President of Security Solutions at Mastercard, said maintaining trust is critical for digital commerce.

“Digital commerce only works when people trust what’s on the other side of the screen. If we let scammers keep posing as legitimate businesses, we don’t just lose money — we lose confidence,” Johnson said.

The launch highlights growing efforts by global payment networks to strengthen fraud prevention tools as AI-driven scams become more difficult to detect.