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Beyond Fraud: How AI Is Transforming the Payments Industry
16.03.2023
3 min
The payments industry has undergone significant changes over the past years driven by the advent of technology and the increasing demand for faster and more convenient experiences. One of the innovative solutions that have played a crucial role in this transformation is Artificial Intelligence (AI).
Although initially AI was primarily used for fraud detection, its use cases have now expanded beyond this sphere and are set to revolutionize the entire payments ecosystem. In this article, we will explore the various ways in which AI is driving change in the payments industry and talk about the future of these developments.
Top 5 AI Use Cases Related to the Payments Sphere
As you probably know, AI helps prevent payment fraud by analyzing data in real time to detect suspicious activity and adapting to new tactics used by fraudsters. There has also been a lot of buzz around AI-powered biometric authentication, such as facial recognition or fingerprint scanning, which is a secure and convenient way to verify a customer's identity.
While these implementations of AI technology are impressive, there are many more opportunities to explore. Below, you’ll find some of the most outstanding payment-related AI developments:
1. Customer Service
AI-powered chatbots are redefining the customer service experience in the payments industry. These virtual assistants help clients with their payment-related queries 24/7, reducing wait times and improving consumer satisfaction. What’s more, they use machine learning algorithms to gain knowledge from customer interactions, becoming smarter and more efficient over time.
While as of now such chatbots may not be able to handle complex queries, such as disputes or account-related issues, they have enormous potential. Thus, we are sure to see them perform more sophisticated interactions as their technology evolves.
2. Predictive Analytics
Predictive analytics is another groundbreaking AI use case in the payments industry. By analyzing historical data, AI-based programs can make predictions about future consumer behavior, such as purchasing patterns, payment method preferences, and even their likelihood of defaulting on bills.
Such software enables businesses to anticipate customer needs and preferences and tailor their offerings accordingly, ultimately leading to better client experiences and higher revenue.
3. Connected Cars
AI technology has proven to be extremely useful when it comes to connected cars, enabling one to make seamless and secure payments directly from the vehicle. For example, drivers can pay for fuel, parking, tolls, and other services without the need for cash or credit cards.
Besides, AI can also enable personalized offers and discounts based on the driver's location, preferences, and past transaction history.
4. Voice Assistance
With the rise of smart speakers and mobile phones, AI voice assistants are becoming a convenient and seamless way to make payments without the need for manual input. This is achieved through the use of natural language processing (NLP) to interpret spoken commands and execute transactions.
Such solutions offer unmatched convenience for consumers, enabling them to authorize transactions without having to navigate through multiple screens - instead they can use simple voice commands. They can also be used for such activities as checking account balances, transferring funds to other users, and setting up recurring payments.
5. Smart Contracts
Smart contracts are digital programs that execute the terms of a contract automatically. They currently work based on specific rules and inputs, yet many believe that AI is their next logical evolutionary step, which is yet to be tapped into. Thus, while smart contracts do not currently use AI to a significant extent, some initiatives are actively developing such solutions.
With AI, smart contracts can be made more intelligent and responsive, adapting to changing conditions and ensuring that they are executed only when the necessary conditions are met.
Summing Up: The Future of AI-Powered Payment Services
Although AI has already been implemented in many payment services, its potential in this industry is just beginning to be explored. As technology continues to advance, businesses can look forward to more AI-driven solutions emerging and improving the efficiency, security, and usability of payments.
What’s more, should the current pace of AI evolution in payments keep up, we can expect to see even more rapid advancements to occur in the near future.