Artificial Intelligence Integration in Payments Sector: An Overview of Current Approaches
Payment companies are increasingly leveraging artificial intelligence (AI) to bolster their operations and services, as highlighted in Q1 2023 earnings calls. According to a recent report, 45% of the reviewed payment companies mentioned artificial intelligence during their earnings calls, with Fintechs like Block, Mastercard, Paypal, Visa, payment processors such as FIS, Fiserv, and B2B players like Flywire discussing AI in their interviews.
The importance of AI in the payment industry is evident, with companies deploying AI across multiple areas to enhance fraud protection, improve customer service, and boost productivity.
Fraud Protection
In the realm of fraud protection, AI enables real-time, proactive defense against increasingly sophisticated threats. AI-powered systems can detect complex tactics like synthetic identity fraud, transaction laundering, and deepfake merchant profiles by analyzing large volumes of data and identifying unusual patterns much faster and more accurately than humans. Companies also use AI-driven risk scoring and automated workflows to escalate authentication or block suspicious transactions immediately without human delays, enabling agile fraud prevention that acts as soon as threats are detected. Cross-industry data sharing and machine learning models allow systems to continuously improve fraud detection and reduce false positives, helping institutions stay ahead of evolving schemes.
Customer Service
Although not explicitly detailed in the results, the use of AI-powered verification and identity orchestration platforms implies smoother customer onboarding and verification experiences by automating identity checks and dynamically adjusting security steps without manual intervention. This reduces friction for genuine customers while maintaining security, reflecting AI’s role in personalized and efficient customer service workflows.
Productivity Improvements
AI automates many detection and verification tasks such as KYB (know your business) and KYC (know your customer), speeding up these processes while maintaining accuracy and compliance. The automation of fraud alerts and response workflows reduces the workload on fraud teams, allowing human investigators to focus on complex cases while AI handles routine or initial threat mitigation.
In summary, AI is being applied in payment companies to enhance fraud protection, improve customer service, and boost productivity. The report found that all AI projections fell into three categories: fraud protection/risk management, customer service/customer experience, and productivity/cost improvements. However, it was often unclear exactly what type of AI companies were applying, and the type of AI referred to in initiatives discussed by companies varied significantly.
One company, Mastercard, addressed concerns of trustworthiness held by many around AI, stressing the importance of being principled about how it tackles AI. Artificial intelligence has been in use by businesses for over a decade, and investors are interested to see what companies are doing in the AI space. The keenness to highlight AI projects old and new reflects the current buzz around AI, as payment companies seek to stay ahead of the curve in the ever-evolving digital landscape.
[1] https://www.alloy.co/blog/the-state-of-ai-in-payments-2023/ [2] https://www.mastercard.com/news/insights/2021/march/artificial-intelligence-and-the-future-of-payments.html [3] https://www.fisglobal.com/insights/articles/2021/how-ai-is-challenging-and-improving-the-world-of-payments [4] https://www.fiserv.com/about-fiserv/newsroom/news/2021/fiserv-announces-new-ai-powered-fraud-detection-capabilities-for-online-payments.html
- Integrating AI technology into their business operations, payment companies aim to strengthen fraud protection by detecting intricate fraud strategies like synthetic identity fraud, transaction laundering, and deepfake merchant profiles.
- The application of AI in the realm of customer service allows for smoother onboarding processes, automating identity checks and dynamically adjusting security steps to reduce friction for genuine customers without compromising security.
