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How Payment Gateways are Emerging Because of AI

Monday, April 01, 2019

Rohit Prasad, Co-Founder and Director, SRV Media & Easebuzz

There is no doubt that Artificial Intelligence (AI) is the future of technology and the world. Whether it is Google navigation apps, automated emails from your bank or customer service chatbots, each of these are fine examples of how AI is transforming the way customers transact and businesses operate.  With every industry, right from banking and finance to transport and logistics leveraging AI to its benefit, the payment gateway industry is not far behind.

Today, payment gateways are integral to e-commerce businesses to accept and process payments. However, they are also prone to fraudulent transactions which can reduce the operational efficiency and lead to customer dissatisfaction. Since AI uses sophisticated algorithms and other technologies such as Machine Learning (ML) and Natural Language Processing (NLP), it can solve all these issues effectively. Hence, the payment gateways industry has received a tremendous boost due to AI.

Let’s take a look at how AI is impacting the payment gateways:
Fraud Detection and Prevention

Credit card and bank frauds are most common in online payments. While the e-commerce merchant, payment gateway service provider and authorizing banks try their level best to ensure the security of transactions, frauds still happen. AI uses rule-based logic and runs it through all transactions. It immediately blocks the suspecting transaction for further processing. AI also does an analysis of past history to uncover dubious patterns and give useful insights in real-time. In this way, AI acts as a robust fraud detection and prevention tools for payment gateways.

Management of False Declines
False declines have been a major problem in the payment gateways industry since many years. Even if the customer and his credit card are authentic, his transactions may be declined. When legitimate transactions are rejected, customers naturally feel disappointed and frustrated. The merchants and banks also lose sales and transactions respectively. This could result in a loss worth millions of dollars across the world. AI evaluates every transaction and assigns them a risk score. Based on this risk-score, AI can help to eliminate false declines and save inconvenience to all stakeholders.

Enhancement of Customer Experience
AI can enable merchants to reduce operational inefficiencies in terms of manual errors and processing times. This results in cost savings which the merchants can pass on to customers in the form of lower processing fees. AI can also automate several repetitive processes to increase the speed of the transactions. It relieves the staff to focus more on core jobs such as strategy planning, new product development, customer service and sales. All these factors improve the customer experience. When the customers are happy with seamless payment processing, they keep coming back to the merchant website and buy more. A win-win situation for everyone!

More on the horizon....
In the next few years, it is expected that AI will enable customers to make online payments through voice recognition and facial recognition features on their devices.
Customers would be able to use multiple layers of security protocols to ensure the security and reliability of their transactions.

AI is enabling the payment gateways to overcome their weaknesses and capitalize on their strengths. It is no surprise that payment gateways industry is more stable than before and reducing entry barriers for new players. Thanks to AI, this is indeed an exciting and fruitful phase for payment gateways.

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