AI In Online Payments: Exploring the Future
The concept of transaction banking is changing. Why? In short - digital innovations, and you guessed it, AI. 81% of finance stakeholders claim that AI provides a competitive advantage to their companies. Read on to explore the fascinating potential of AI in payments and how companies like yours can profit from them.
Discover:
- How AI can work in payment processing.
- Why AI is necessary in online payments.
- What are the challenges related to AI?
- What lies ahead?
How AI can work in payment processing.
AI has advanced payment processing, facilitating internet shopping and bill payments. According to a survey in 2021, one-third of the finance respondents indicated their companies fully embraced AI payments.
1. Computer vision.
Computer vision is being used by AI in online payments to replace credit cards and cash. It comprehends visual data using the recognition of patterns and provides precise descriptions. Computer vision also helps to digitally record account information.
2. Detecting fraud.
AI uses big data to analyse transactional history and patterns to develop user profiles for payments. Any suspicious transactional data can be detected by AI, which can automatically alert the bank or customer. This can then prompt them to block the account or request additional information to process the transaction.
3. Customer experience.
Customer experience can be enhanced by digital banking, powered by AI payments. Thanks to AI and natural language processing, customers can communicate with chatbots instead of waiting to speak to an agent.
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Why AI is necessary in online payments.
Transactions via digital payments are over $9 trillion and are projected to surpass $ 11.5 trillion in 2027. With the predicted increase, a sophisticated fraud detection system is required.
As a result, AI algorithms must be employed to meet the rising demand for electronic payments. Banks can use machine learning (ML) and artificial intelligence (AI) to analyse massive amounts of data and spot irregularities. Rahul Mewawalla, CEO of Zenplace, agrees with this idea and claims that “AI and machine learning can enable banks to become more competitive in other industries like real estate.”
Such vast online transactions globally would require high fraud detection algorithms, which can only be made possible using AI.
What are the challenges related to AI?
The amount of online transactions that occur every day is one of the many reasons that AI in payments is vital. But, some of the key challenges that come with AI and online payments are:
Team buy-in.
The topic of AI is often coupled with the fear of job losses. This fear can result in a reluctance from companies to embed AI into their digital systems. It’s crucial that businesses address these concerns head on by emphasising the collaborative character of AI and how technology can boost, rather than replace, human capabilities.
Technological constraints.
Some areas of AI still need improvement. For instance, AI chatbots are incredibly useful, but require more emotional responses to respond to challenging situations. Technologies need to be developed so that AI can handle deeper conversations and resolve more complex issues.
The cost vs affordability.
AI payments undoubtedly provide innovation and security, but the technology can still be expensive. The same concern was shared by Martha Bennet, principle analyst at Forrester Research, who said, “We have come across companies that have switched off specific algorithms because the benefit they gained from running them did not outweigh the cost.”
So, what’s the solution? It may be time to evaluate your business model. Adopting a modern model that’s more *AI-centric, means you’ll be able to reach your full potential with the support of technology.
*AI-centric means include practices like Application Programming Interfaces (APIs), making transactions more efficient.
What lies ahead?
There’s no denying that AI payments are the future. From natural speech detection to online shopping recommendations, AI is making the world more convenient.
Businesses can use AI to identify scams and take preventative measures to stop them in their tracks. Through ID verification using biometric information, customers' confidential data can be protected from scammers. AI can also protect via two-factor authentication (2FA) or the identification of facial features.
Know Your Customer (KYC)
KYC is regarded as a must before any customer establishes a bank or online payment account. It’s a procedure that confirms the identity of the person. It also reveals whether any risks are associated with doing business with that individual or business.
AI is automating KYC by helping with identity verification and boosting compliance processes. AI systems look at various data sources, including documents and biometric information, to quickly and accurately verify customers' identities. By eliminating the need for manual verification processes, the KYC process can be completed faster and with less chance of human error.
Conclusion
AI payments have paved the way for streamlined payment processing. They can efficiently handle large amounts of data, ensuring all regulatory standards are met. And, they can smoothly handle the expected future growth in payment volumes. For businesses, it’s clear that it’s time to seriously consider if your current model can adapt successfully to the hefty changes AI brings. The future of online payments is, by all accounts, AI.
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