Dive Overview:
- Artificial intelligence has been used in the payments industry for years, but the emergence of advanced generative AI could lead to better fraud detection, more payment solutions for small and medium-sized businesses and smoother business-to-business payments, analysts at investment bank Jefferies Group said in a research report last week.
- Fraud-detection services have long relied on computer programs to sift through millions of transactions to spot anomalies, a process that analysts have written could be sped up by generative AI.
- Additionally, AI can automatically reconcile payment transactions with outstanding invoices, reducing the time it takes to transfer money between businesses, the company said.
Dive Insights:
While generative AI has garnered attention in recent years for its conversational and writing skills, payments companies will primarily use the tech to get better at what they already do, according to a report published June 27 by Jefferies.
For example, banks have programs that monitor credit cards, debit cards, and checking accounts for unusual purchases or transfers.
“For many years, it's been all about prediction,” says Agustin Rubini, a director analyst in the financial services team at the CIO group at consulting firm Gartner in Stamford, Conn. “You're trying to find answers to problems, you're trying to find patterns in the data.”
Companies like Visa For example, Atlanta-based fintech company Global Payments already offers such fraud-detection services, but it is now able to spot fraud more efficiently, New York City-based Jefferies said in the report.
“With GenAI, (Visa) has expanded its anti-fraud expertise from cards to account-to-account payments, while (Global Payments) announced that its GenAI-enabled fraud detection solution for issuer businesses has reduced fraud losses by 50% for customers who use the solution,” the research report said.
Generative AI could also improve the services available to small businesses.
Jefferies analysts wrote that artificial intelligence tools could help merchants set prices, improve menu placement on their websites and allocate spending more efficiently.
Vendors who provide services to other companies may also see faster payments: Artificial intelligence can instantly match invoices to payment methods, ensuring invoices are processed the moment they're submitted, according to Jefferies.
Roubini said advanced AI can also help prevent so-called “blocking” — anything that stops a payment from progressing — and ensure vendors are paid more quickly.
Milwaukee, Wisconsin-based fintech company Fiserv, one of the companies specifically highlighted in the Jefferies report, said in a statement that it uses AI to automate tasks such as “dispute resolution and device installation.”
“Machine learning has improved our ability to apply AI to serve our customers by making customer service calls faster and more accurate in their resolution, and we have plans to build out even more customer-focused capabilities,” the statement said.
But the Jefferies report noted that companies using artificial intelligence must be aware of the risks.
Artificial intelligence programs like Google's AI search tool Applying glue to pizza AI chatbots like ChatGPT that eat rocks Easy to be fabricated.
AI used for payments can also make mistakes, and companies that use it need to be prepared for unforeseen circumstances such as coding errors.
Additionally, legal liability for errors made by AI systems is unclear, the report said.
