Ep. 127 - Fighting the Next Decade of Payment Fraud, with Mastercard

Liam Gray (0:05)

Hello and welcome. My name is Liam Gray, co-host of The Payments Shed Podcast, coming to you live from Fintech Meetup Europe here in Lisbon. Today, I am joined by Berthold Barodte, Senior Vice President of Security Solutions, Europe at Mastercard. Welcome to the show, Berthold.

Berthold Barodte (0:21)

Thank you very much, Liam. A pleasure being here.

Liam Gray (0:23)

Thank you for joining us. Before we dive into everything, can you give us a quick intro?

Berthold Barodte (0:27)

Sure, absolutely.

As you just said, my name is Berthold Barodte, I'm responsible for Security Solutions at Mastercard in Europe. I joined that role pretty much two years ago, but I have a long background in Mastercard. I joined Mastercard roughly 12 years ago. I have mostly been in their consulting side as well, always on the services side and then moved on into this product role, which I'm currently leading since pretty much two years.

Liam Gray (0:51)

Okay, and can you tell us a little bit about the product role that you're in at the moment?

Berthold Barodte (0:55)

Absolutely. Security Solutions is a fairly wide spectrum of solutions. We start with cybersecurity.

We then have our identity business. We have our fraud business. We have the post-transaction business, mostly around experience and disputes, so subscription management or charge backs, a typical topic here. And last but not least, it's also covering our resiliency solutions, which in our terms is what we call stand-in as a typical example as well. One of the key priorities in Europe currently, if we talk with regulators, is resilience, therefore a very important pillar of our business as well.

Liam Gray (1:33)

Perfect. And if we take a step back for a moment and look at the fraud and cybercrime space in general, how has the threat environment changed over recent years?

Berthold Barodte (1:44)

Well, most of it actually, I would say cybercrime is constantly growing. It's gaining more and more relevance in terms of how much damage it creates and there are actually numbers calling out something like $12.6 trillion of cost, what cybercrime will cost us by 2030 And I always need to put that into perspective because numbers get very huge. And if cybercrime would be an economy, that would mean it's the third biggest economy in the world looking at GDP, for example. So that's how much cybercrime has gained importance over the last year. And additionally, now linking it more to payments, there's another important statistic there, and that's remote payment fraud. This is going to be hitting roughly 50 billion by 2030 as well. And this is also because the lines between fraud and cybercrime are blurring. Those topics are converging. And to me, this is mainly driven by three factors. Number one, AI. While AI is one of the biggest assets we have to fight fraud and crime, it's also one of the very relevant tools for the attackers on the other side.

Secondly, we see access to cybercrime tools and fraud tools get much easier. On the black market, you can buy even cybercrime as a service.

And last but not least, we see a change in attackers. We see more and more nation-state initiated cybercrime, which is also putting additional attention to the topic overall.

Liam Gray (3:24)

Wow. So those three pillars are really driving everything behind cybercrime. And I suppose one pillar that I want to talk to a little bit more is that AI piece. Is AI making the cybercriminals more effective in general, or is it just making them faster at what they do?

Berthold Barodte (3:43)

It's honestly both. They are getting significantly more sophisticated in what they can do and how they can do it. When we look at, for example, the attacks around fake identities, impersonation, scams in general, just the number of scams we see, the quality of the scams increase significantly. But AI also helps them to then attack fraud, do fraud attacks at scale. So just imagining how many card numbers they can take from the dark web and run bots to test those card numbers in order to identify which card numbers are valid and which numbers they can use to predict crime. So AI is doing both.

Making it quicker but also making it better.

Liam Gray (4:28)

And I suppose it's become more important than ever for consumers in particular to have those protections. And I suppose that nicely segues into what Mastercard is doing. So what's Mastercard doing to protect consumers from these new threats and these potentially even more dangerous threats than have ever been there before?

Berthold Barodte (4:50)

So the advantage of Mastercard is we are sitting on a large number of, we roughly process 160 billion transactions a year.