AI in payment processing

Artificial intelligence is infiltrating Card-Not-Present (CNP) commerce and changing the way we pay. Learn how AI and voice technology are influencing embedded payments.

About a decade ago, artificial intelligence (AI) was largely reserved only for a handful of industries. As this new revolutionary chapter kicked off, AI’s applications remained segmented within sectors like manufacturing, transport, and defense, which have been increasingly dependent on tech.

The bulk of financial institutions and banks, on the other hand, were convinced that their customers would always rely on branches and ATMs. Face-to-face banking and commerce were the norms, and it was hard to see it any other way. Even as E-commerce began to take off, it was hard to predict exactly what the impact would be on brick-and-mortar commerce.

A lot has changed.

According to a report, 1.31 billion people are estimated to use a mobile payment system for their cashless transactions by 2023. In May 2022, the total website visits from mobile devices were 52.79%, while the website visits from desktops were just 47.21%.

As digital commerce continues to evolve, advances in artificial intelligence and machine learning have also been developing new applications. Slowly but surely, AI has been infused into banking, finance, and digital commerce. In addition to applications for fraud prevention and risk mitigation, AI is transforming the way people order and pay via chat and voice bot technology.

What is Machine Learning and Voice Bot Technology?

Machine learning engines use advanced algorithms to crawl through and systematically analyze digitized labeled data. The results are leveraged by predictive mathematical models that are able to facilitate automatic operations without explicit programming.

For example, a machine learning engine is capable of assessing your payment patterns and frequency. It’s one of the most basic applications of this technology. In fact, 48% of businesses are using machine learning, deep learning, data analysis, and natural language processing to effectively make use of large data sets.

Voice bot technology is another application of artificial intelligence that is creating ripples in the digital payment space. Backed by machine learning technology, voice bots can execute verbal commands given by users.

Today, chatbots have become one of the fastest-growing brand communication channels, with the global chatbot market size expected to touch $1.25 billion by 2025. As a result, 33% of consumers would like to use voice bots to make reservations, place online orders, and perform other functions. Add to that, consumers’ changing preferences in how they make purchases—and you get a perfect storm for digital transformation and a shakeup in the way people pay.

Impact of Machine Learning Engines & Voice Bots on Payments

There are several ways in which machine learning and voice bots are revolutionizing payments. We’ll explore some of these below.

Detecting and Preventing Fraud

As part of the card-not-present (CNP) space, mobile payments often present a higher risk for fraud and chargebacks. AI technologies can combat this through transaction filtering, where only high-risk transactions are flagged for additional review. This not only streamlines transactions for businesses but vastly improves the customer experience. It creates more frictionless payments and helps avoid alienating good customers. Some examples are using AI to automate the identification of low-risk purchasing behaviors, such as returning to abandoned carts or frequent, low-ticket purchases by the same person. By using behavioral analytics, geolocation, and perhaps biometrics, AI can “tag” certain transactions as low-risk, bypassing increased security layers. The technology can use those same attributes to identify fraudulent or suspicious activity and flag those transactions to prevent fraud.

Reduced friction is critical to successful M-commerce, making this AI application very important. As companies like Uber push embedded payments into the mainstream, this will become the norm—and expectation—for everyday consumers. People, particularly those on mobile devices, prefer to have payments happen in the background rather than as an extra hoop they have to jump through.

Reduced False Declines

AI is also aiding in real-time authorizations, a boon for omnichannel merchants. For example, Mastercard’s Decision Intelligence boasts “invisible technology with visible results.” It enables real-time authorization via pattern identification and machine learning, which can comb through thousands of data points using sophisticated modeling to authorize transactions.

With one in six consumers experiencing declines due to suspected fraud and more than a third of those consumers not returning to the store after a false decline, the need for this technology is clear. This application of AI to mobile payments can increase brand loyalty, decrease operating costs, and increase revenue for retailers.

Voice Technology Caters to Consumers

Biometrics has been infiltrating the payments space for years. Biometric features are ubiquitous as Apple Pay allows people to pay with TouchID. The benefit of biometrics to consumers is that it provides fast and frictionless payments on a device that consumers are using for everything.

The catch is the security conundrum. Embedded payments are great when layered with effortless security features that enable easy payments. Without security, frictionless payments simply equate to easy theft for bad actors.

This is where AI payments can truly cater to consumers with easy yet secure payments. Over half of U.S. adults have smart home devices, of which nearly 30% use Voice Assistants with them.

As conversational commerce becomes more common, people are interacting with tech differently. It follows that payments will be a big part of this.

Voice bots are quickly joining the payments conversation with their chatbot counterparts. AI and machine learning technology provide for the automation of essential services, including inquiries and transactions. The ability to integrate this technology with enterprise systems leads to efficiency improvements and better accuracy across the board.

AI In Payment Processing: What lies ahead?

As AI and voice technology continue to evolve, we will see embedded payments become ubiquitous. The new standard for mobile payments will be the elimination of the payment “process” altogether, affording consumers an easy way from point A to point B while AI does the heavy lifting in the background.

Contact us to learn more about how you can benefit from using AI in payments.

Team Opus

We’re giving you a fresh dose of insights, perspectives and the latest trends from the world of payments.

linkedin

    Join our mailing list to be the first to know about industry news, Opus updates & upcoming events.

    We’re hiring!
    Learn about
    careers at
    Opus
    WordPress Video Lightbox Plugin