Anyone who has a credit card has probably experienced some sort of fraud over the last few years. I personally have had it happen several times and I am by no means unique. Today IBM purchased IRIS Analytics, a firm that helps banks detect fraudulent use of credit cards using machine intelligence.

The company has been considering a product like this for some time, Bob Griffin, general manager for IBM Safer Planet told TechCrunch, and it went through the classic build/buy discussion.

When the focus became acquisition, Griffin says that IRIS really stuck out. “We began looking at a variety of capabilities and that’s how we discovered IRIS Analytics . It’s a small company in Germany doing phenomenal things. [We felt] it was the best positioned and most effective technology offering around real-time payments and fraud prevention,” he said.

One of the biggest differentiators, according to Griffin was that IRIS uses what he calls a “white box model.” This means that as hackers discover new ways of stealing credit card information, customers can adapt on their own without going back to the vendor for help. In a “black box model,” the vendor controls all the access and it requires a process to make changes.

The other big factor for IBM is that the IRIS solution uses machine learning and cognitive learning to get better over time both on an individual and institutional level. If you don’t travel in Russia and your credit card is suddenly being used there, the system will recognize that and flag the account. If there is a pattern of fraud across cards or in a geographical area, IRIS will detect that too.

The trick is detecting fraud while it happens instead of waiting until after the fact, and that’s one of IRIS’s strengths, he said. Conversely, it could help determine when an event is a false positive, one that looks like fraud, but actually is just a usage anomaly.

As IBM tries to transform into a company concentrating on cloud, big data, security and analytics, it’s clear how this acquisition fits within that list. IRIS checks every box offering security product with a cloud option that uses data and analytics to get better over time.

What’s more, Griffin says the company plans to incorporate this technology in different areas, perhaps connecting with Watson where it makes sense and offering the technology as a service eventually on their Bluemix developer platform. He says once IRIS is more fully integrated into the fold, IBM will begin to look more closely at how they can take advantage of the technology in other areas of the company

While Griffin would not disclose the purchase price, he said the sale already closed just before the end of last year. The two companies are actually meeting this week to begin integration talks.