Since the launch of OpenAI’s ChatGPT’s free version in November 2022, discussions of the potential business applications for artificial intelligence (AI) have cropped up in board rooms and offices everywhere. The truth is, however, that AI solutions have been delivering business value for some time. AI is used in a variety of ways to automate processes and increase efficiency. Businesses also leverage AI to analyze data for more accurate forecasting, identifying trends and anomalies, and revealing the best steps to take to resolve issues. According to IBM research, 35 percent of companies are using AI in standard business processes, and 42 percent are exploring its potential, including companies considering the benefits of AI in payments.
Use Cases for AI in Payments
The payments industry, like all others, is continually looking for ways to increase efficiency, lower costs, and provide the best experiences. AI can benefit the payments industry in all of these ways, including:
- Enabling More Efficient Processing
Speed is one of the biggest benefits this technology brings to the payments space. With machine learning algorithms and predictive analytics, AI can analyze massive amounts of data in microseconds, streamlining approval processes. - Fraud Detection
Payment fraud is expected to cost the U.S. $165 billion in the next 10 years. Payment companies are implementing AI to defend against fraud, using the technology to quickly search databases of lost and stolen cards, new accounts, customers with a higher-than-average number of chargebacks, and other information that could indicate that the customer is attempting to make a purchase is involved in fraudulent activity. - Increasing Productivity
AI allows payment companies to automate manual processes. For example, computer vision can speed up Know Your Customer (KYC) reviews by enabling customers to submit pictures of necessary documents such as driver’s licenses. This allows payment companies to manage the onboarding process more quickly and accurately. - Predicting Customer Behavior
AI tools can analyze historical transaction data, industry data, and demographic information to foresee the types of products and payment services most likely resonate with customers. This AI capability can help companies in the payments industry—and their ISV and VAR partners—retain customers longer and make them more profitable by offering products and services merchants want. - Improving Customer Service
AI chatbots can bring immediate improvement by helping customers get quick answers to many of the most often-asked questions and pointing them to the resources they need. Intelligent solutions can also determine when a customer needs the assistance of a human agent and hand off the call, providing all of the information it has collected so the agent can address the issue more quickly. Additionally, with AI handling FAQs and simple requests, customer service agents can focus on addressing more complex issues and increasing customer satisfaction. Overall, chatbots can save businesses’ customer service teams up to 30 percent of operating costs. - Enhancing Merchant Experiences
AI can streamline onboarding and customer service, but it can also reduce the number of false declines. This not only minimizes disputes at the checkout and frustrated consumers, but it also helps merchants control fees for declined transactions.
See What Happens Next
AI would be extremely valuable if it only provides the payments industry with these benefits. However, the industry is just starting to identify use cases and implement AI solutions. Companies that move forward strategically will find ways to free employees to focus on tasks that require a human touch while bringing speed and accuracy to routine processes. Therefore, AI in payments is likely to become a competitive differentiator as some companies find ways to leverage the technology for great benefits—and others lag behind. Make sure your business takes full advantage of AI-powered innovations.
If you’re ready to discuss how to stay on the cutting edge of payments, contact us.
