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AI Payments: How is AI affecting the payment industry?

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The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedJun 20232 min read

Are you using AI in your everyday business operations? According to an IBM study, 35% of businesses surveyed reported using AI already, with 42% exploring its possibilities. While there’s been a focus on AI’s potential when it comes to marketing and customer service, this technology is also useful for payment processing. With AI payments, you can improve security while providing a better user experience – but what is payments AI and how do you get started? We’ll cover the basics in this guide.

What is payments AI?

Artificial intelligence (AI) is a term you’ll see everywhere these days, but what does it really mean? It describes any simulation of human intelligence by machines. When robots or computers use human-like intelligent processing systems, this is AI. Specific examples include things like speech recognition, language processing, and machine learning.

Payments AI takes these processes and applies them to the payment processing, AI accounting and finance sectors. For example, AI-driven tools like chatbots and virtual assistants can be used to answer customer questions during the checkout or fulfillment process. With natural language processing, these tools mimic human intelligence to solve problems efficiently and at lower cost. AI payment processing is also used for open banking, big data, and fraud protection. Machines can sift through large volumes of data at pace, spotting red flags and unusual behaviors.

What are some use cases of AI in the payments industry?

Here’s a closer look at a few specific applications for AI in the payments industry.

1. Predicting buyer behavior.

With AI, service providers can keep an eye on customer spending patterns to identify patterns and usage types. With access to a customer’s transaction history, the retailer can offer personalized deals and discounts. This helps businesses create more tailored pricing structures and offer custom payment options at checkout.

2. Improving customer service.

AI-powered chatbots and virtual assistants are placed in customer-facing settings to provide 24-7 contact with customers. These can help customers complete checkout, reducing customer churn and abandoned shopping cart rates. Financial institutions and payment technology businesses can use AI tools to solve chargebacks and other issues.

3. Preventing card declines.

There are numerous reasons why a customer’s credit or debit card is declined, and many of these are through no fault of their own. For example, a mistyped zip code or system error could lead to the transaction being terminated. This results in customer frustration and lost income for the business. In fact, research shows that 62% of customers who experience a failed transaction won’t return to the website to try again. With payment AI intelligence, false card declines can be stopped in their tracks using powerful algorithms to reduce costly errors.

What are the benefits of AI in payment processing?

Businesses can benefit from AI in many ways, from improved security to targeted marketing outreach. When it comes to payment processing, here are a few key advantages:

Early threat identification for better response rates
Rapid, full-system scans to spot red flags
Streamlined payment processing through automation
Reduced risk of errors
Predictive analytics and machine learning handles large volumes of data
Real-time fraud protection cuts the need for manual approvals
Less time spent on repetitive manual tasks
Faster, more efficient payments experience for customers
Gain valuable insights into customer preferences and buying behavior
Provide a user-friendly payments process across multiple platforms
Improve the mobile payment process

Should your business use AI payments?

With so many applications, it’s clear that AI tools provide value to the payment industry. You’ll be able to gain insight and benefit from a better understanding of your customer needs during the payments process, all while reducing costly chargebacks and failed payments.

To get started, look for platforms and tools with built-in AI features. For example, GoCardless uses payment intelligence with its Success+ solution. This manages and reduces payment failures, recovering an average of 70% of payments that fail the first time around. Pull payments directly from customer bank accounts on the day they’re due, reducing involuntary churn and bad debt. GoCardless also integrates with over 350 partners, including top automated invoice and accounting software to streamline your billing processes.

We can help

GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.