Ballerine has introduced its new Scam & Fraud Detection API, an agentic AI-powered solution designed to identify high-risk merchants and fraud networks in under 60 seconds. With this launch, the company aims to shift fraud prevention from reactive transaction monitoring to proactive detection before any transaction takes place.

As fraud schemes become more sophisticated, traditional approaches are struggling to keep up. Instead of relying solely on static onboarding checks or post-transaction monitoring, Ballerine’s solution analyzes a broader set of signals. These include a merchant’s digital footprint, behavioral patterns, ownership structures, and ecosystem connections. Consequently, organizations can detect fraudulent intent earlier and prevent financial losses more effectively.

This innovation comes at a time when merchant-driven fraud is becoming increasingly automated and scalable. In fact, industry experts are now referring to this trend as an “AI scamdemic,” where fraud operations that once took months to establish can now be launched in just days. Moreover, coordinated fraud networks operate across multiple identities, geographies, and payment providers, often remaining undetected until significant damage has already occurred.

To address this evolving threat landscape, modern fraud detection is shifting from rule-based systems to intelligence-driven analysis. Rather than simply identifying errors, AI models now focus on intent, behavior, and identity signals. As a result, financial institutions are increasingly adopting AI as a defensive layer to detect subtle anomalies, uncover AI-generated fraud patterns, and stop suspicious activity before it escalates.

“The industry is facing a structural gap as fraud has evolved into coordinated, AI-powered operations, while many risk systems are still built for a slower, manual world. If it takes days to determine whether a merchant is risky, that gap is already being exploited at scale,” said Noam Izhaki, Co-founder and CEO of Ballerine. “Our Scam & Fraud Detection API solution can determine a malicious merchant in less than 60 seconds and block fraudulent transactions before they happen. This new offering demonstrates our commitment to adding another layer of protection to our customers as new trends arise.”

Unlike traditional systems that evaluate merchants individually, Ballerine’s API is designed to uncover patterns across networks. For example, it can identify clusters of related entities, detect inconsistencies between declared and actual business activities, and flag early signs of transaction laundering. Additionally, it reveals hidden risks embedded within seemingly legitimate storefronts, enabling organizations to take action before fraud spreads.

“What we are seeing is not just more fraud, but more structured fraud,” said Cihat Fitzgerald, Chief Risk Officer at Ballerine and former Head of Ecosystem Risk at Visa. “These are coordinated systems designed to move across acquirers and geographies. That creates pressure across the entire payments ecosystem”.

Supporting this launch is research from The Synthetic Merchant Economy: How Fraudulent Merchants Are Infiltrating the Payment Ecosystem, authored by Noam Izhaki. The study, based on the analysis of tens of millions of merchants, highlights recurring fraud models such as synthetic identities, deceptive storefront networks, scam subscription schemes, and transaction laundering operations. Importantly, these patterns behave like scalable systems that evolve faster than traditional detection methods.

Ultimately, the findings reveal a widening gap between how fraud operates and how it is detected. While AI has significantly lowered the barriers to launching fraudulent operations, many organizations still rely on fragmented data and delayed review processes. As digital commerce moves toward agent-driven ecosystems, the ability to instantly assess merchant legitimacy will become critical.

In this rapidly evolving landscape, Ballerine’s latest solution underscores a major shift toward real-time, intelligence-driven fraud prevention helping organizations build trust while staying ahead of increasingly complex threats.

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