Future of Commercial Payments (Part 2)

The introduction of AI in the Payments World

Although AI is in its infancy, it is expected to explode in growth over the next few years. One question that many have had is how AI will impact Payments, my thoughts on this topic are below.

The introduction of AI

The first area that I believe AI will help in the payments industry is in enhanced fraud detection. This will be helpful as I for one am tired of my bank flagging my card for not knowing me well enough to know that I pay for items in 6-month subscriptions at times.

AI-powered algorithms can analyze vast amounts of data to identify patterns and anomalies, helping to detect and prevent fraudulent transactions more effectively. This type of pattern detection enhances security and protects both businesses and consumers. Since AI can analyze customer data and behavior, including individual preferences and needs, the AI system will understand which payments are legitimately made by the customer vs fraud attacks against a customer. This of course allows AI to improve the overall customer experience, leading to increased customer satisfaction and loyalty.

The second is in the field of faster risk assessment. I remember working on card risk assessment of credit for commercial and consumer accounts. AI will automate the risk assessment processes, enabling faster and more accurate credit scoring and lending decisions. This will streamline the payment process for individuals and businesses, making it easier to access credit and financial services.

One of the great things about AI is its ability to analyze historical payment data and market trends that will be used to make predictions about future payment patterns and behaviors. AI does this by collecting and organizing payment data, including transaction records, customer information, and market indicators.

Once collected, it applies statistical models and pattern recognition algorithms to identify correlations, trends, and patterns within the data. These Models allow the AI system to analyze various factors such as purchase history, spending patterns, demographics, economic indicators, and market conditions. And as such, the ability to recognize relationships between variables and payment patterns or behaviors. Through the identification of these relationships, AI can make predictions about future payment patterns and behaviors. As more and more data patterns become available and since the AI system continuously learns, the AI system can improve its predictions by incorporating new data and adjusting its models accordingly. Thus, AI systems have the ability to adapt to changing market conditions and evolving customer behaviors, allowing it to provide more accurate predictions over time.

One of the biggest payment enhancements that AI is expected to make is in leveraging technologies like facial recognition, voice recognition, and other biometrics such as fingerprints. This type of AI technology is expected to make the payments process simplified, reduce checkout friction, and enhance user experience.

In one of my earlier posts, I had mentioned that I was a victim of fraud which probably wouldn’t have happened if a payment AI was put in place. I mention it because this type of enhancement would not have allowed the transaction to happen and would’ve marked the transaction request as fraud.
AI will automatically monitor and ensure compliance with regulatory requirements in the payments industry. Through the automation of the compliance processes, AI will help businesses stay up to date with ever changing regulations.

And finally, AI-powered chatbots and virtual assistants are expected to handle customer inquiries, provide support, and assist with payment-related tasks. This will improve customer service through the offering of real-time assistance and reduced response times. I am currently not a big fan of today’s Chat Bots or phone help desk bots. Although the bots are trained enough to answer basic questions, they are brainless as they can’t learn from human response making them nothing more than a preprogrammed auto-response unit.

With the integration of AI technology into payment systems we will see enhanced and streamlined payment processes. AI will be used to automate various aspects of payment processing, such as fraud detection, risk assessment, and customer support. Payment APIs provide the necessary interfaces and protocols for AI systems to communicate with payment gateways and process transactions securely. This integration allows for more efficient and accurate payment processing, improved user experience, and enhanced security measures. The next step is to build the interaction and apply it to payment system APIs.