Artificial Intelligence (AI) has been here for quite some time now and is ever-changing the world around us. This cutting edge technology has flourished our day to day lives with technological innovations & payment processing is no longer an exception.
This new technology is thriving worldwide, with a global market of $327.5 billion in 2021, as per one report by Statista. Also, another report by Statista revealed that almost 37% of the finance industry worldwide depends on Artificial Intelligence for its risk and service operations.
AI has become the backbone of most cutting-edge technologies available around us. Discussed in this article is the complete overview of the role of Artificial Intelligence in Payment Processing.
Need for the Implementation of AI in Payment Processing
Massive digitalization and innovative technologies have led us to the era of online shopping and digital payments. Moreover, the number of online payments worldwide has increased drastically during the surge of the Covid-19 pandemic. Therefore, online payments have grown exponentially in the last few years.
Such proliferation of online payments across the globe has also significantly increased the probability of security breaches and fraudulent cases. This is where the need for taking help from Artificial Intelligence arises.
The primary purpose behind the implementation of AI in payment processing is to provide a solid security backbone. It is not practical for the payment processors to verify each online transaction manually and manage them in the pool of thousands of transactions.
However, the payment processors can be trained through artificial intelligence and machine learning to identify suspicious and fraudulent transactions and escalate them manually.
Moreover, it can also improve the efficiency and speed of online payment, thus providing a decent customer experience that every online business owner wants.If you are running on Magento ecommerce than you can check Payment Restriction For Magento 2
How AI is Changing the Online Payment Processing Landscape
Artificial Intelligence has a lot of things to offer to online payments processing. Discussed here is how AI is changing the payment processing landscape and a future outlook of the same.
The ways of online payment have changed drastically in the last few years with improved security and fraud protection. However, the fraudsters have also successfully evolved with the ever-changing technologies. The battle is endless!
Online payments fraud has evolved in complexity and is no longer detectable through simple logic and patterns.
As per one survey conducted by Payments, Artificial Intelligence has proved to be an effective way to prevent fraudulent transactions. Along with Machine Learning, it can spot suspicious transaction activity & anomalies in a large set of data and can
It is well suited as a temporary fraud protection measure to prevent false positives. Considering all these, AI in payment fraud prevention can significantly reduce the efforts required to review each transaction.
Improved Efficiency & Speed
Artificial intelligence is the future of faster online payments and convenient processing. AI-enhanced payment processing can help to review more transactions in a given time with better accuracy. This adds to the processing efficiency & speed of the payment processor.
Artificial Intelligence bypasses the need for manual processes such as exception processing. Moreover, it can also provide better data-driven insights available at the point of need to make better decisions.
Enhanced Customer Experience
Customer experience is an essential success-deciding factor in every business, especially for the eCommerce stores. Improving the customer experience of the check out process can impact the overall brand equity and customer loyalty.
A streamlined payment process is possible using Artificial Intelligence in payment processing, and it can reduce the transaction screening time and make the payment process smoother than ever.
Moreover, artificial intelligence can gather various information about the customers in extensive data that can be used for remarketing or personalization purposes. Once assembled, the data can be used for multi-purposes across multiple channels to improve the customer experience and retention rate.
AI in Online Payments Processing – Future Challenges
Artificial intelligence is thriving in the fintech industry. The industry leaders are rapidly implementing it. However, there are some possible future challenges that it needs to overcome to flourish.
The possible future challenges for artificial intelligence to flourish the payment processing in the fintech market are provided below.
- Cultural Challenges: Artificial Intelligence gives a sense of threat amongst the clients due to some of its misconceptions. As a result, the influenced online business owners may find it difficult to implement AI-powered payment processing in their business.
- Technological Limitations: Sometimes, the AI-powered payment processors may fail to detect fraudulent transactions and could not be relied on. However, it is getting better with time; it can also produce false-positive results and affect the overall operation.
- Data Integration: Financial institutions and organisations usually work with an extensive data set unorganised in vertical silos. Such silos need to be integrated to introduce smooth AI-powered payment processing. Moreover, modifying such a comprehensive data set to get recognized by AI is also a challenge.
- Business Models: Along with implementing AI in online payment processing, payment processors need to adapt to new business models with new operations. Moreover, fintechs need to adapt to cutting edge technologies such as cloud applications.
Summing Up – The Future of AI in Online Payments
Artificial intelligence has a lot to offer to humankind. It is being implemented in online payment processing for multiple purposes, fraud protection being the prime one.
AI in online payment processing is just around the corner, with many opportunities for online business owners. However, AI has a long way to go to replace fraud analysts fully.
There is a clear prospect of the AI-powered online business world, and businesses need to pace up with the ever-emerging technologies to survive in the highly-competitive market.
About the Author
Shivbhadrasinh Gohil is the Wizard of Light Bulb Moments at Meetanshi. He is a Digital Marketer and has been optimising Magento stores since 2010. He has founded 2 successful Magento Agencies since 2014. When not working, you can find him reading books or spending time with his daughter & son.